As filed with the Securities and Exchange Commission on June 30, 2000
Registration No. 33-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GREYHOUND FUNDING LLC
(Issuer of the Notes)
RAVEN FUNDING LLC
(Transferor of the 1999-1A Sold SUBI Certificate and the Class X 1999-1B SUBI
Certificate to the Issuer and Originator of D.L.Peterson Trust)
D.L. PETERSON TRUST
(Issuer of the 1999-1A Sold SUBI Certificate and the Class X 1999-1B SUBI
Certificate)
(Exact names as specified in charters)
DELAWARE 7389 51-0391968
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
----------------------
900 Old Country Road
Garden City, New York 11530
(516)222-6980
(Address, including zip code, and telephone number, including area code, of
principal executive offices of Greyhound Funding LLC, Raven Funding LLC and
D.L. Peterson Trust)
-----------------------
Karen Sclafani
900 Old Country Road
Garden City, New York 11530
(516) 222-4732
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
-----------------------
Copies to:
<PAGE>
John Donovan Laura Palma
White & Case LLP Simpson Thacher & Bartlett
1155 Avenue of the Americas 425 Lexington Avenue
New York, New York 10036 New York, New York 10017
(212) 819-8200 (212) 455-2000
--------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. \__\
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. \__\
If the delivery of the prospectus is expected to be made pursuant to
Rule 434 under the Securities Act, check the following box. \__\
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<PAGE>
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Aggregate Aggregate Amount of
to be Amount to Price Offering Registration
Registered be Registered Per Unit Price Fee
--------------- ------------ ------------ ------------ -----------
Asset Backed $500,000 100% <F1> $500,000 $132
Notes, Class A-1
Asset Backed $500,000 100% <F1> $500,000 $132
Notes, Class A-2
1999-1A Sold <F2> <F3> <F3> <F3>
SUBI Certificate
Class X 1999-1B <F2> <F3> <F3> <F3>
Sold SUBI
Certificate
<F1> Estimated solely for purposes for calculating the registration fee.
<F2> The 1999-1A Sold SUBI Certificate (the "Lease SUBI Certificate") issued
by the D.L. Peterson Trust constitutes a beneficial interest in a
specified portion of the vehicles, leases and rights associated
therewith held by the D.L. Peterson Trust. The Class X 1999-1B Sold
SUBI Certificate (the "Fleet Receivable SUBI Certificate") issued by the
D.L. Peterson Trust constitutes a beneficial interest in a pool of fleet
service receivables held by the D.L. Peterson Trust. The Lease SUBI
Certificate and the Fleet Receivable SUBI Certificate (the "Sold SUBI
Certificates") will not be offered to investors pursuant to this
registration statement. The Sold SUBI Certificates are the primary
assets of Greyhound Funding LLC and will secure the Asset-Backed Notes.
<F3> Not Applicable.
---------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
-3-
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . $264
Printing and Engraving Expenses . . . . . . . . . . . . . . . . . . *
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . *
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . *
Trustee Fees and Expenses . . . . . . . . . . . . . . . . . . . . . *
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . *
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ *
====
_______________
* To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
Section 3817 of Chapter 38 of Title 12 of the Delaware Code provides
that, subject to such standards and restrictions, if any, set forth in the
governing instrument of a business trust, a business trust shall have the
power to indemnify and hold harmless any trustee or beneficial owner or other
person from and against any and all claims and demands whatsoever.
Pursuant to Section 7.5 of the supplement to the servicing agreement
relating to the Lease SUBI and the Fleet Receivable SUBI, PHH Vehicle
Management Services LLC has agreed to indemnify Wilmington Trust Company, as
the SUBI trustee and the Delaware trustee, to the extent provided in Section
5.5 of the origination trust's trust agreement. Section 5.5 of the
origination trust's trust agreement provides that each trustee of the
origination trust shall be indemnified and held harmless with respect to any
loss, liability or expense, including reasonable attorneys and other
professional fees and expenses, arising out of or incurred in connection with
(a) any of the origination trust's assets or (b) such trustee's acceptance or
performance of the trusts and duties contained in the origination trust's
trust agreement; provided, however that the trustee shall not be indemnified
or held harmless as to any claim (i) incurred by reason of that trustee's
willful misfeasance, bad faith or gross negligence (or, with respect to the
handling or disbursement of funds, negligence) or (ii) incurred by reason of
such trustee's breach of its representations and warranties pursuant to the
servicing agreement or the origination trust's trust agreement.
Reference is also made to the Underwriting Agreement among PHH Vehicle
Management Services, LLC, Avis Rent A Car, Inc., Greyhound Funding LLC, Chase
Securities Inc. and the other underwriters named therein (see Exhibit 1.1),
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<PAGE>
which provides for indemnification by PHH Vehicle Management Services, LLC,
Avis Rent A Car, Inc. and Greyhound Funding LLC in certain circumstances.
Item 15. Recent Sales of Unregistered Securities.
Not Applicable.
Item 16. Exhibits and Financial Statement Schedules.
Exhibit
No. Description
------- ------------
*1.1 Proposed form of Underwriting Agreement.
3.1 Certificate of Formation of Greyhound Funding LLC
3.2 Amended and Restated Limited Liability Company Agreement of Greyhound
Funding LLC dated as of October 28, 1999.
3.3 Certificate of Formation of Raven Funding LLC
3.4 Amended and Restated Limited Liability Company Agreement of Raven
Funding LLC dated as of October 28, 1999
4.1 Base Indenture dated as of June 30, 1999 between Greyhound Funding
LLC and The Chase Manhattan Bank, as Indenture Trustee, as amended as
of October 28, 1999.
*4.2 Form of Indenture Supplement between Greyhound Funding LLC and The
Chase Manhattan Bank, as Indenture Trustee
*4.3 Form of Notes (included in Exhibit 4.2).
*5 Opinion of White & Case LLP regarding the legality of the Notes being
registered.
*8.1 Opinion of White & Case LLP regarding certain tax matters.
*8.2 Opinion of Richards, Layton & Finger regarding certain Delaware state
tax matters.
*8.3 Opinion of Piper & Marbury LLP regarding certain Maryland state tax
matters.
10.1 Amended and Restated Origination Trust Agreement, dated as of June
30, 1999, among Raven Funding LLC, as settlor and initial
beneficiary, PHH Vehicle Management Services, LLC, as UTI Trustee,
and Wilmington Trust Company, as Delaware Trustee.
10.2 Sold SUBI Supplement 1999-1A to the Origination Trust Agreement,
dated as of June 30, 1999, as amended as of October 28, 1999, among
Raven Funding LLC, as settlor and initial beneficiary, PHH Vehicle
Management Services, LLC, as UTI Trustee and Servicer, and Wilmington
Trust Company, as Delaware Trustee and SUBI Trustee.
10.3 Sold SUBI Supplement 1999-1B to the Origination Trust Agreement,
dated as of June 30, 1999 among Raven Funding LLC, as settlor and
initial beneficiary, PHH Vehicle Management Services, LLC, as UTI
Trustee and Servicer, and Wilmington Trust Company, as Delaware
Trustee and SUBI Trustee.
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<PAGE>
10.4 Origination Trust Servicing Agreement, dated as of June 30, 1999,
between D.L. Peterson Trust and PHH Vehicle Management Services, LLC,
as Servicer.
10.5 Sold SUBI Supplement 1999-1 to the Origination Trust Servicing
Agreement, dated as of June 30, 1999, between D.L. Peterson Trust,
Wilmington Trust Company, as SUBI Trustee, Raven Funding LLC and PHH
Vehicle Management Services, LLC.
10.5 Transfer Agreement, dated as of June 30, 1999, as amended as of
October 28, 1999, between Raven Funding LLC and Greyhound Funding
LLC.
10.6 Administration Agreement, dated as of June 30, 1999, as amended as of
October 28, 1999, by and among PHH Vehicle Management Services, LLC,
as Administrator, Greyhound Funding LLC, Raven Funding LLC and The
Chase Manhattan Bank, as Indenture Trustee.
10.7 Management Agreement, dated as of June 30, 1999, by and among Global
Securitization Services LLC, Greyhound Funding LLC and PHH Vehicle
Management Services, LLC.
*23.1 Consent of White & Case LLP (included in its opinions filed as
Exhibit 5 and 8.1).
*23.2 Consent of Richards, Layton & Finger (included in its opinion filed
as Exhibit 8.2).
*23.3 Consent of Piper & Marbury LLP (included in its opinion filed as
Exhibit 8.3).
23.4 Consent of Deloitte & Touche LLP with respect to financial statements
of Greyhound Funding LLC.
23.5 Consent of Deloitte & Touche LLP with respect to financial statements
of D.L. Peterson Trust (included in Exhibit 23.4).
24 Power of Attorney (included on page II-3 hereof).
*25 Statement of Eligibility and Qualification of the Indenture Trustee
on Form T-1.
_____________________________
* To be filed by amendment.
-3-
<PAGE>
Item 17. Undertakings
The registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of the registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 14 above, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Garden
City, State of New York on June __, 2000.
GREYHOUND FUNDING LLC
By:/s/ Kevin M. Sheehan
--------------------------------------
Name: Kevin M. Sheehan
as principal executive officer
RAVEN FUNDING LLC
By /s/ Kevin M. Sheehan
--------------------------------------
Name: Kevin M. Sheehan
as principal executive officer
D.L. PETERSON TRUST
By: Raven Funding LLC, solely as settlor of
the D.L. Peterson Trust
By: Kevin M. Sheehan
--------------------------------------
Name: Kevin M. Sheehan
as principal executive officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gerard J. Kennell and Neil J. Cashen, and each
of them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June __, 2000.
Signatures Title
/s/ Kevin M. Sheehan
------------------------------------ principal executive officer of
Kevin M. Sheehan Greyhound Funding LLC
/s/ Gerard J. Kennell
------------------------------------ principal financial officer of
Gerard J. Kennell Greyhound Funding LLC
/s/ Neil J. Cashen
------------------------------------ principal accounting officer of
Neil J. Cashen Greyhound Funding LLC
/s/ Joseph W. Weikel
------------------------------------ Manager of Greyhound Funding LLC
Joseph W. Weikel and Raven Funding LLC
/s/ Kevin Burns
------------------------------------ Manager of Greyhound Funding LLC
Kevin Burns
/s/ Tony Wong
------------------------------------ Manager of Greyhound Funding LLC
Tony Wong
/s/ Kevin M. Sheehan
------------------------------------ principal executive officer of
Kevin M. Sheehan Raven Funding LLC
/s/ Gerard J. Kennell
------------------------------------ principal financial officer of
Gerard J. Kennell Raven Funding LLC
/s/ Neil J. Cashen
------------------------------------ principal accounting officer of
Neil J. Cashen Raven Funding LLC
/s/ F. Robert Salerno
------------------------------------ Manager of Raven Funding LLC
F. Robert Salerno
/s/ Kevin M. Sheehan
------------------------------------ Manager of Raven Funding LLC
Kevin M. Sheehan
-6-
<PAGE>
/s/ David O. Taylor
------------------------------------ Manager of Raven Funding LLC
David O. Taylor
/s/ Bernard J. Angelo
------------------------------------ Manager of Raven Funding LLC
Bernard J. Angelo
-7-
<PAGE>
INDEX TO EXHIBITS
Sequential page
Exhibits number
-------- ---------------
*1.1 Proposed form of Underwriting Agreement.
3.1 Certificate of Formation of Greyhound Funding
LLC
3.2 Amended and Restated Limited Liability Company
Agreement of Greyhound Funding LLC dated as of
October 28, 1999.
3.3 Certificate of Formation of Raven Funding LLC
3.4 Amended and Restated Limited Liability Company
Agreement of Raven Funding LLC dated as of
October 28, 1999
4.1 Base Indenture dated as of June 30, 1999
between Greyhound Funding LLC and The Chase
Manhattan Bank, as Indenture Trustee, as
amended as of October 28, 1999.
*4.2 Form of Indenture Supplement between Greyhound
Funding LLC and The Chase Manhattan Bank, as
Indenture Trustee
*4.3 Form of Notes (included in Exhibit 4.2).
*5 Opinion of White & Case LLP regarding the
legality of the Notes being registered.
*8.1 Opinion of White & Case LLP regarding certain
tax matters.
*8.2 Opinion of Richards, Layton & Finger regarding
certain Delaware state tax matters.
*8.3 Opinion of Piper & Marbury LLP regarding
certain Maryland state tax matters.
10.1 Amended and Restated Origination Trust
Agreement, dated as of June 30, 1999, among
Raven Funding LLC, as settlor and initial
beneficiary, PHH Vehicle Management Services,
LLC, as UTI Trustee, and Wilmington Trust
Company, as Delaware Trustee.
10.2 Sold SUBI Supplement 1999-1A to the Origination
Trust Agreement, dated as of June 30, 1999, as
amended as of October 28, 1999, among Raven
Funding LLC, as settlor and initial
beneficiary, PHH Vehicle Management Services,
LLC, as UTI Trustee and Servicer, and
Wilmington Trust Company, as Delaware Trustee
and SUBI Trustee.
-8-
<PAGE>
10.3 Sold SUBI Supplement 1999-1B to the Origination
Trust Agreement, dated as of June 30, 1999
among Raven Funding LLC, as settlor and initial
beneficiary, PHH Vehicle Management Services,
LLC, as UTI Trustee and Servicer, and
Wilmington Trust Company, as Delaware Trustee
and SUBI Trustee.
10.4 Origination Trust Servicing Agreement, dated as
of June 30, 1999, between D.L. Peterson Trust
and PHH Vehicle Management Services, LLC, as
Servicer.
10.5 Sold SUBI Supplement 1999-1 to the Origination
Trust Servicing Agreement, dated as of June 30,
1999, between D.L. Peterson Trust, Wilmington
Trust Company, as SUBI Trustee, Raven Funding
LLC and PHH Vehicle Management Services, LLC.
10.5 Transfer Agreement, dated as of June 30, 1999,
as amended as of October 28, 1999, between
Raven Funding LLC and Greyhound Funding LLC.
10.6 Administration Agreement, dated as of June 30,
1999, as amended as of October 28, 1999, by and
among PHH Vehicle Management Services, LLC, as
Administrator, Greyhound Funding LLC, Raven
Funding LLC and The Chase Manhattan Bank, as
Indenture Trustee.
10.7 Management Agreement, dated as of June 30,
1999, by and among Global Securitization
Services LLC, Greyhound Funding LLC and PHH
Vehicle Management Services, LLC.
*23.1 Consent of White & Case LLP (included in its
opinions filed as Exhibit 5 and 8.1).
*23.2 Consent of Richards, Layton & Finger (included
in its opinion filed as Exhibit 8.2).
*23.3 Consent of Piper & Marbury LLP (included in its
opinion filed as Exhibit 8.3).
23.4 Consent of Deloitte & Touche LLP with respect
to financial statements of Greyhound Funding
LLC.
23.5 Consent of Deloitte & Touche LLP with respect
to financial statements of D.L. Peterson Trust
(included in Exhibit 23.4).
24 Power of Attorney (included on page II-3
hereof).
*25 Statement of Eligibility and Qualification of
the Indenture Trustee on Form T-1.
____________________________
* To be filed by amendment.
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<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 30, 2000
Preliminary Prospectus
$_________ Series 2000-1 Floating Rate Asset Backed Notes, Class A-1
$_________ Series 2000-1 Floating Rate Asset Backed Notes, Class A-2
GREYHOUND FUNDING LLC
Issuer
PHH Vehicle Management Services, LLC, Servicer of D.L. Peterson Trust
Our primary sources of funds for payment of the notes are payments on the
leases and the proceeds from the sale of the vehicles subject to the
leases allocated from time to time to a special unit of beneficial
interest in the D.L. Peterson Trust owned by us and collections on the
receivables generated by PHH Vehicle Management Services, LLC in its
fleet management business allocated from time to time to another special
unit of beneficial interest in the D.L. Peterson Trust owned by us.
We are offering the following classes of notes for sale:
Class A-1 Class A-2
Principal Amount $________________ $________________
Price $__________ (___%) $__________ (___%)
Underwriters' Commissions $__________ (___%) $__________ (___%)
Proceeds to the Issuer $__________ (___%) $__________ (___%)
Interest Rate one-month LIBOR + one-month LIBOR +
___% p.a. ___% p.a.
Interest Payment Dates monthly on the 7th monthly on the 7th
First Interest Payment Date ____________, 2000 _____________, 2000
Final Maturity Date _____________, ___ _____________, ____
The price and proceeds to the issuer do not include interest
accrued from the date the notes will be issued. The total price
(excluding that interest) will be $_________.
The total underwriters' commissions will be $___________.
The aggregate proceeds to the issuer, before deducting expenses
payable by the issuer estimated to be $__________, will be
$___________.
These notes are obligations of Greyhound Funding LLC and are backed only
by the assets of Greyhound Funding LLC. These notes are not obligations
of PHH Vehicle Management Services, LLC, D.L. Peterson Trust, Avis Group
Holdings, Inc. or any of their affiliates.
These notes are highly structured. Before you purchase these notes, be
sure you understand the structure and the risks. See "Risk Factors"
beginning on page __.
We have applied to have these notes listed on the Luxembourg Stock
Exchange.
<PAGE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on
the adequacy or accuracy of the disclosures in this prospectus. Any
representation to the contrary is a criminal offense.
The underwriters have agreed to purchase the notes, subject to the terms
and conditions in the underwriting agreement.
Chase Securities Inc.
The date of this Prospectus is ______, 2000.
-2-
<PAGE>
Table of Contents
Notice About Information in This Prospectus . . . . . . . . . . . . . . 4
Transaction Structure . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Structural Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Characteristics of the Leases May Change Over Time . . . . . 14
Declines in Market Value of Leased Vehicles Could Reduce Payments
to You . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Repayment of Your Series 2000-1 Notes is Limited to Our Assets . 15
Repayment of Your Series 2000-1 Notes May be Dependent On
Payments Made Underthe Interest Rate Caps . . . . . . . . 15
You May Receive Principal Payments Earlier or Later than
Anticipated . . . . . . . . . . . . . . . . . . . . . . . 16
Our Indirect Ownership of the Leases, the Vehicles
and the Receivables Could Result in Reduced Payments
to You . . . . . . . . . . . .. . . . . . . . . . . . . . 18
Insolvency or Bankruptcy of Vehicle Management Services Could
Result in Delayed or Reduced Payments to You . . . . . . . 20
Our Issuance of Additional Series May Affect the Timing of
Payments to You . . . . . . . . . . . . . . . . . . . . . 21
Dependence on Computer Systems Owned By Cendant Corporation
Could Result in Delayed or ReducedPayments to You . . . . 21
You May Not Be Able to Resell Your Series 2000-1 Notes . . . . . 22
Withdrawal or Downgrading of the Initial Ratings of the
Series 2000-1 Notes Will Affectthe Prices of the
Series 2000-1 Notes Upon Resale . . . . . . . . . . . . . 22
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Greyhound Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Raven Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Vehicle Management Services . . . . . . . . . . . . . . . . . . . . . 30
Characteristics of the Leases and Vehicles . . . . . . . . . . . . . 42
Maturity Assumptions . . . . . . . . . . . . . . . . . . . . . . . . 49
Description of the Series 2000-1 Notes . . . . . . . . . . . . . . . 55
The Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Security for the Series 2000-1 Notes . . . . . . . . . . . . . . . . 79
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . 86
The Origination Trust and the Servicing Agreement . . . . . . . . . . 88
The Receivables Purchase Agreement, the Asset Purchase Agreement
and the Contribution Agreement . . . . . . . . . . . . . . . . . 102
Certain Legal Aspects of the Origination Trust and Ownership of
the Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . 106
Employee Benefit Plan Considerations . . . . . . . . . . . . . . . . 110
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Listing and General Information . . . . . . . . . . . . . . . . . . . 120
Where You Can Find More Information . . . . . . . . . . . . . . . . . 121
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . F-1
<PAGE>
Notice About Information in This Prospectus
You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with different
information.
As you read through these sections, cross-references will direct you
to more detailed descriptions elsewhere in this prospectus. You can also
directly reference key topics by looking at the table of contents in this
prospectus.
You can find a glossary of the defined terms that appear in this
prospectus in bold faced type under the caption "Glossary of Terms"
beginning on page G-1.
We are not offering these notes in any state where the offer is not
permitted.
We do not claim the accuracy of the information in this prospectus
as of any date other than the date stated on the cover.
To understand the structure of these securities, you must carefully read
this prospectus in its entirety.
<PAGE>
Transaction Structure
[Graphic]
<PAGE>
Summary of Terms
Issuer: Greyhound Funding LLC
Transferor: Raven Funding LLC
Servicer and Administrator: PHH Vehicle Management Services,
LLC -"Vehicle Management Services"
Indenture Trustee: The Chase Manhattan Bank
Pricing Date: _________, ____
Closing Date: _________, ____
Clearance and Settlement: DTC/Cedelbank/Clearstream
Collateral: Beneficial interest in a revolving
pool of leases and the vehicles
subject to or anticipated to be
subject to the leases owned by the
origination trust, a beneficial
interest in a pool of receivables
generated by Vehicle Management
Services in its fleet management
business and owned by the
origination trust, interest rate
caps in respect of the fixed rate
leases and floating rate leases
that may be converted to a fixed
rate and amounts on deposit in
bank accounts.
Origination Trust: D.L. Peterson Trust
Settlor of Origination Trust: Raven Funding LLC
Delaware Trustee: Wilmington Trust Company
<PAGE>
Class A-1 Class A-2
Initial Principal Amount $___,___,___ $___,___,___
Interest Rate: [one-month LIBOR + ___% [one-month LIBOR +___%
p.a.] p.a.]
Interest Accrual Method: actual/360 actual/360
Interest Payment Dates: monthly (7th) monthly (7th)
Interest Rate Index Reset 2 business days 2 business days
Date: before each payment date before each payment
date
First Interest Payment Date: _________, ___ _________, ___
Record Date: last business day of the last business day of
calendar month before the calendar month
each payment date before each payment
date
Final Maturity Date
(no later than): _________, 20xx _________, 20xx
Anticipated Ratings Aaa/AAA* Aaa/AAA*
ERISA Eligible: Yes** Yes**
Application for Exchange
Listing: Luxembourg Luxembourg
Minimum Denomination: $1,000 and multiples $1,000 and multiples
thereof thereof
CUSIP Number: ______________ ______________
ISIN: ______________ ______________
Common Code: ______________ ______________
* It is a condition to issuance that one of these ratings be
obtained.
** Investors subject to ERISA should consult with their counsel.
Credit Enhancement:
- overcollateralization,
- collections on up to $80,000,000 of receivables
generated by Vehicles Management Services in its fleet
management business,
- amounts available in a reserve account and
- amounts available in a yield supplement account.
Principal Payments:
- Unless there is an amortization event, the amortization
period will begin on ______, 200_ and we will begin
making principal payments on the series 2000-1 notes on
_______, 200_.
- Principal payments on the series 2000-1 notes will be
applied to the class A-1 notes until paid in full and
then to the class A-2 notes. If there is an
amortization event, principal payments on the series
<PAGE>
2000-1 notes will be applied to the series 2000-1 notes
on a pro rata basis until paid in full.
Structural Summary
In this summary we briefly describe the major structural components
of the series 2000-1 notes and the sources of payment for them. To fully
understand the terms of the series 2000-1 notes you will need to read
this prospectus in its entirety.
The Issuer
We were formed on June 24, 1999 in connection with the financing of the
acquisition by Avis Group Holdings, Inc. of Vehicle Management Services
and its affiliates engaged in the vehicle management and fuel card
business. We were established to finance the leases and the related
vehicles owned by Vehicle Management Services on the date of the
acquisition and to finance the leases and vehicles acquired by Vehicle
Management Services after the acquisition. Through our ownership of two
special units of beneficial interest in the origination trust, we have an
indirect interest in the leases and the related vehicles and a pool of
receivables generated by Vehicle Management Services in its fleet
management business.
We finance the leases and related vehicles and the receivables allocated
from time to time to our special units of beneficial interest in the
origination trust by issuing notes under the indenture and issuing junior
and senior preferred membership interests. Our business activities are
limited to acquiring the special units of beneficial interest in the
origination trust from Raven Funding, acquiring all additional leases and
the vehicles relating to those leases and receivables allocated to our
special units of beneficial interest from time to time, pledging our
assets to secure the notes under the indenture and undertaking related
activities.
The Series 2000-1 Notes
The series 2000-1 notes are our obligations and bear interest at the
rates and are payable on the dates stated in the summary of terms.
The series 2000-1 notes, together with all other notes issued under the
indenture, are secured by substantially all of our assets.
For more information about us, see "Greyhound Funding". For more
information on the series 2000-1 notes, see "Description of the Series
2000-1 Notes".
Vehicle Management Services
PHH Vehicle Management Services LLC is a wholly-owned subsidiary of Avis
Group Holdings. Vehicle Management Services provides integrated card
payment, vehicle leasing and value-added vehicle management services to
companies and government agencies in North America and, through its
<PAGE>
affiliates, in Europe. Vehicle Management Services' services consist of
vehicle leasing and related asset-based services and a broad range of
fee-based services that include fuel and maintenance cards, accident
management and various other vehicle-related services.
For more information on Vehicle Management Services, see "Vehicle
Management Services".
Vehicle Management Services acts as servicer of the assets held by the
origination trust under a servicing agreement. Avis Group Holdings has
agreed to guarantee Vehicle Management Services' indemnity and repurchase
obligations under the servicing agreement. Vehicle Management Services
also performs specified administrative duties for us and Raven Funding
under an administration agreement.
For more information on Vehicle Management Services' obligations under
the servicing agreement and the administration agreement, see "The
Origination Trust and the Servicing Agreement--The Servicing Agreement"
and "Greyhound Funding--Administration Agreement".
Origination Trust
D.L. Peterson Trust was established by Vehicle Management Services in
order to avoid the administrative difficulty and expense associated with
retitling vehicles in connection with the financing or transfer of
vehicles subject to leases.
Repayment of the Series 2000-1 Notes
We will rely on collections from our leases, sales proceeds from the
disposition of the related vehicles, collections on the receivables and
funds on deposit in specified accounts to make payments on the series
2000-1 notes. We will be solely liable for payments on the series 2000-1
notes.
The timing of principal payments on the series 2000-1 notes is largely
dependent on the timing of collections of cash generated by our assets.
During the amortization period, principal will be paid on your series
2000-1 notes on each payment date in an amount generally equal to the
available principal distribution amount generated by payments on the
leases and proceeds from the sale of the vehicles.
Principal payments on the series 2000-1 notes generally will be made to
the holders of the series 2000-1 notes sequentially. No principal will
be paid on the class A-2 notes until the class A-1 notes have been paid
in full. However, after the occurrence of an amortization event,
principal payments on the series 2000-1 notes will be made on a pro rata
basis to all classes of the series 2000-1 notes until they have been paid
in full.
<PAGE>
Final Maturity Dates
Any unpaid principal of any class of series 2000-1 notes will be payable
in full on the applicable final maturity date listed on the cover page of
this prospectus.
If, on the final maturity date for either the class A-1 notes or the
class A-2 notes, the amount of collections available to pay principal on
a class of notes is insufficient to pay the principal amount of that
class of notes in full, amounts on deposit in the reserve account will be
applied to pay the deficiency. In addition, if the amount on deposit in
the reserve account on the final maturity date for the class A-2 notes is
less than the deficiency, amounts on deposit in the yield supplement
account will be applied to pay the remaining deficiency.
For more information about the repayment of principal of the series 2000-
1 notes and the amortization period, see "Description of the Series 2000-
1 Notes--Payment of Principal" and "Maturity Assumptions".
Optional Prepayment
We will have the option to prepay the class A-2 notes, in whole but not
in part, on any payment date on which the unpaid principal amount of the
class A-2 notes is less than or equal to 10% of the initial aggregate
principal amount of the series 2000-1 notes.
For more information about our optional prepayment of the series 2000-1
notes, see "Description of the Series 2000-1 Notes--Optional Prepayment".
Collateral
The series 2000-1 notes and all other notes that we have issued and will
issue under the indenture will be secured by a first-priority perfected
security interest in the following assets:
- a special unit of beneficial interest in those leases and the
related vehicles owned by the origination trust and allocated to
that interest, including the related rights under the servicing
agreement and the other origination trust documents,
- a special unit of beneficial interest in a pool of receivables
generated by Vehicle Management Services in its fleet management
business, including the related rights under the servicing
agreement and the other origination trust documents,
- our rights under the transfer agreement under which we acquired
those special units of beneficial interest from Raven Funding,
- our rights under the administration agreement,
- funds on deposit from time to time in the collection account and
the "gain on sale" account, an account which we fund up to a
fixed amount with gains that we receive when we sell vehicles
subject to closed-end leases,
<PAGE>
- interest rate caps that we are required to obtain from time to
time in respect of the fixed rate leases and the payments due
under those interest rate caps and
- all proceeds of the foregoing.
In addition, the series 2000-1 notes will be secured by
- the interest rate cap with The Chase Manhattan Bank that we will
purchase in respect of the floating rate leases that may be
converted to fixed rate leases after the closing date and the
payments due under that interest rate cap and
- funds on deposit from time to time in the reserve account, the
yield supplement account and the distribution account.
For more information about the collateral for the series 2000-1 notes,
see "Security for the Series 2000-1 Notes".
Leases
Leases and the related vehicles are the principal assets allocated to one
of our special units of beneficial interest in the origination trust.
The vehicles related to the leases include vehicles subject to the leases
and vehicles that are acquired by the origination trust at the request of
a lessee but not yet accepted by that lessee. A significant majority of
the vehicles are cars and light-duty trucks.
The leases are:
- open-end leases or closed-end leases of cars, trucks and other
motorized vehicles originated under a master lease agreement with
the lessee, or
- individual open-end consumer leases or closed-end consumer leases
of cars and light-duty trucks.
Either Vehicle Management Services or PHH Financial Services Corporation
originated the master lease agreements and assigned them to the
origination trust or the origination trust originated the master lease
agreements directly. PHH Financial Services Corporation is a subsidiary
of Cendant Corporation which is engaged in equipment leasing. The leases
originated by PHH Financial Services were acquired by the origination
trust in connection with the acquisition of Vehicle Management Services
by Avis Group Holdings.
PHH PersonaLease Corporation originated the consumer leases, individually
or on behalf of the origination trust. PersonaLease is a subsidiary of
Vehicle Management Services that was established to originate vehicle
leases primarily to individuals who are either members of an affinity
group or employees or independent contractors of customers of Vehicle
Management Services.
<PAGE>
The open-end leases are typically structured with a 12 month minimum
lease term, with month to month renewals after the end of the minimum
lease term, and provide for rent payments that include a depreciation
component, an interest or finance charge component and payment of all
costs related to the titling, licensing and registration of the related
vehicle, applicable taxes and other expenses prepaid by the lessor.
Vehicles are typically depreciated on a straight-line basis over 40, 45,
50 or 60 months, at the option of the lessee. The residual risk on the
value of the leased vehicle at the end of the lease term remains with the
lessee, except for a small amount which is retained by the lessor to
permit classification of the lease as an operating lease under generally
accepted accounting principles.
Closed-end leases are typically structured with a fixed term of 24, 36 or
48 months, with the lessor retaining the residual risk on the value of
the leased vehicle at the end of the lease term. Closed-end leases
typically provide for a fixed monthly rental payment based on a rate
schedule.
Vehicle Management Services, as servicer, is obligated to certify that
each master lease agreement or consumer lease meets specified eligibility
criteria as a condition to any allocation of that master lease agreement
or consumer lease to our special unit of beneficial interest in the
origination trust. The servicer will be obligated to purchase an
ineligible lease if the servicer breached its representation regarding
the eligibility of that lease.
For additional information about the eligibility criteria for each
consumer lease and each master lease agreement, see "Security for the
Series 2000-1 Notes--Lease SUBI and Fleet Receivable SUBI--Eligibility
Criteria".
In addition, the servicer is deemed to make a representation that a new
lease under an existing master lease agreement allocated to our special
unit of beneficial interest in the origination trust meets specified
eligibility criteria at the time that that lease is included in the
borrowing base for the notes.
When we were formed, all of the master lease agreements and consumer
leases satisfying the specified eligibility criteria were allocated to
our special unit of beneficial interest in the origination trust. Since
that time, Raven Funding has allocated to our special unit of beneficial
interest all additional master lease agreements and consumer leases
originated by the origination trust satisfying the specified eligibility
criteria.
Raven Funding is not obligated to continue to allocate additional master
lease agreements or consumer leases to our special unit of beneficial
interest, but it is Raven Funding's current intention to continue to do
so. Raven Funding, as the initial beneficiary of the origination trust,
may from time to time cause master lease agreements and consumer leases
to be allocated to one or more other special units of beneficial interest
in the origination trust.
<PAGE>
However, Raven Funding is obligated to allocate to our special unit of
beneficial interest in the origination trust all vehicles that are
acquired by the origination trust at the request of a lessee party to a
master lease agreement already allocated to our special unit of
beneficial interest but not yet accepted by that lessee under that master
lease agreement and the lease relating to that vehicle once accepted by
the lessee.
Vehicles
The vehicles subject to the leases include:
- automobiles and light duty trucks,
- medium and heavy duty trucks, truck chassis, truck bodies and
truck tractors,
- truck trailers and
- other types of motorized vehicles.
Interest Rate Caps
On the closing date, we will own an interest rate cap with Bank of
America, N.A. in respect of the fixed rate leases allocated to our
special unit of beneficial interest in the origination trust as of the
closing date.
In order for a fixed rate lease allocated to our special unit of
beneficial interest in the origination trust after the closing date to
satisfy the eligibility criteria for funding under the indenture, we will
be required to have or obtain an interest rate cap in respect of that
lease from a bank or other financial institution having short-term debt
ratings of "A-1+" from Standard & Poor's and "P-1" from Moody's and
long-term unsecured debt ratings of at least "AA-" from Standard & Poor's
and "Aa3" from Moody's.
Lessees generally have the right to convert a floating rate lease to a
fixed rate lease at any time on 30 days' notice. On the closing date, we
will obtain an interest rate cap from The Chase Manhattan Bank in respect
of the floating rate leases allocated to our special unit of beneficial
interest that may be subsequently converted to fixed rate leases.
For more information about the maximum strike rate and the minimum
required notional amount of the interest rate caps that we are required
to maintain, see "Security for the Series 2000-1 Notes--Interest Rate
Caps".
Overcollateralization
In order to provide credit enhancement for defaulted leases and losses
upon the sale of vehicles, the amount of collateral that is required
under the indenture to support the payment of the notes is greater than
<PAGE>
the aggregate principal amount of all series of notes. This
overcollateralization plus any amount on deposit in the reserve account
or the principal subaccount of the collection account is generally
required to equal 14.9425% of the initial aggregate principal amount of
the series 2000-1 notes. This required amount of credit enhancement will
increase upon the occurrence of specified events and will not decline as
the outstanding principal amount of the series 2000-1 notes declines.
For information about these events, see "Credit Enhancement--Required
Enhancement Amount".
On the closing date, the required amount of credit enhancement will be
provided by overcollateralization funded by the preferred membership
interests that we will issue on the closing date, other series of
preferred membership interests that we have issued, the common membership
interest in us held by Raven Funding and amounts on deposit in the
reserve account.
An amortization event will occur if the amount of collateral supporting
the payment of the notes is less than the required amount for more than
two business days.
Fleet Receivables
We own a special unit of beneficial interest in a pool of receivables
generated by Vehicle Management Services in its fleet management
business. These receivables are amounts payable under the fleet service
contracts that Vehicle Management Services has with its customers, and
include, among others, payment obligations arising from:
- fuel card programs,
- vehicle maintenance charges and
- accident management services.
Collections on these receivables are intended to supplement the payments
on the leases and the sales proceeds of the related vehicles and provide
credit and yield enhancement for payments on the notes.
Reserve Account
As an additional source of credit enhancement, we will establish a
reserve account. The reserve account will be funded as follows:
- on the closing date, we will make an initial deposit into the
reserve account of $22,538,000, which is 2.2538% of the aggregate
initial principal amount of the series 2000-1 notes and
- on each payment date, the indenture trustee will deposit into the
reserve account any excess collections remaining after the payment
of interest and principal on the series 2000-1 notes and dividends
<PAGE>
on the preferred membership interests relating to the series 2000-1
notes and various other obligations and expenses.
After the closing date the indenture trustee will make those deposits to
the reserve account only if they are needed to maintain a balance in the
reserve account equal to our initial deposit.
The indenture trustee will withdraw available amounts from the reserve
account on each payment date to cover shortfalls in payments of interest
and principal on the series 2000-1 notes and the preferred membership
interests relating to the series 2000-1 notes.
An amortization event will occur if the amount on deposit in the reserve
account is less than the required amount for more than two business days.
Yield Supplement Account
As an additional source of yield enhancement for interest payments on the
series 2000-1 notes, we will establish a yield supplement account. The
yield supplement account will be funded as follows:
- on the closing date, we will be obligated to make an initial
deposit into the yield supplement account if the yield shortfall
amount is greater than the portion of the aggregate balance of
the fleet management receivables allocated to the series 2000-1
notes on the closing date and
- on each payment date, the indenture trustee will deposit into the
yield supplement account any excess collections remaining after
payment of interest and principal on the series 2000-1 notes and
dividends on the preferred membership interests relating to the
series 2000-1 notes, various other obligations and expenses and
after required amounts have been deposited into the reserve
account.
After the closing date the indenture trustee will make those deposits to
the yield supplemental account only if they are needed to maintain a
balance in the yield supplement account equal to the amount by which the
yield shortfall amount exceeds the portion of the aggregate balance of
the fleet management receivables allocated to the series 2000-1 notes.
The indenture trustee will pay any further excess collections to us.
There will be no funds on deposit in the yield supplement account on the
closing date.
The indenture trustee will withdraw available amounts from the yield
supplement account on each payment date to cover shortfalls in payments
of interest on the series 2000-1 notes and the preferred membership
interests relating to the series 2000-1 notes.
An amortization event will occur if the amount on deposit in the yield
supplement account is less than the required amount for more than two
business days.
<PAGE>
The yield shortfall amount will increase if the interest rates on the
series 2000-1 notes and the dividend rates on the preferred membership
interests relating to the series 2000-1 notes increase under
circumstances where the interest rates or the finance charges on the
floating rate leases do not increase commensurately.
For information about the yield shortfall amount, see "Credit
Enhancement-- Required Yield Supplement Account Amount".
Gain on Sale Account
As an additional source of credit enhancement, we have established a bank
account with the indenture trustee in which we deposit gains on sale of
vehicles which were subject to closed-end leases. We are not required to
deposit funds or retain amounts on deposit in the gain on sale account if
the amount on deposit in the gain on sale account exceeds the amount that
is required to remain on deposit in the gain on sale account. The
indenture trustee will release excess amounts on deposit in the gain on
sale account to us.
Amounts on deposit in the gain on sale account are available to cover
residual value losses on vehicles which were subject to closed-end
leases. A residual value loss is the amount by which the net proceeds
from the sale of a vehicle which was subject to a closed-end lease is
less than the net book value of that vehicle.
We fund the gain on sale account with the amounts by which the sales
proceeds of the vehicles which were subject to closed-end leases exceed
the net book values of those vehicles.
On the date of this prospectus, there are no funds on deposit in the gain
on sale account.
For more information regarding the gain on sale account and the amount
that is required to remain on deposit in the gain on sale account, see
"Description of the Series 2000-1 Notes--Bank Accounts--Gain on Sale
Account".
Tax Status
White & Case LLP, as special tax counsel to the issuer, is of the opinion
that:
- the series 2000-1 notes will be characterized as indebtedness for
federal income tax purposes, and
- the issuer will not be a separately taxable entity for federal
income tax purposes.
By accepting a series 2000-1 note, each holder or beneficial owner will
agree to treat the series 2000-1 notes as indebtedness. You should
consult your own tax advisor regarding the federal income tax
consequences of the purchase, ownership and sale of the series 2000-1
<PAGE>
notes, and the tax consequences arising under the laws of any state or
other taxing jurisdiction.
For more information on the tax consequences of the purchase, ownership
and sale of the series 2000-1 notes, see "Tax Matters".
ERISA Considerations
We expect that the series 2000-1 notes will be eligible for purchase by
employee benefit plans. However, benefit plans contemplating a purchase
of series 2000-1 notes should consult their counsel before making a
purchase.
Ratings
The series 2000-1 notes will be issued only if they are rated in the
highest long-term category by either Moody's or Standard & Poor's. We
cannot assure you that a rating will not be lowered or withdrawn by an
assigning rating agency.
Mailing Address and Telephone Number of Principal Executive Office
Our mailing address is 900 Old Country Road, Garden City, New York 11530,
and our telephone number is (516) 222-6980.
<PAGE>
Risk Factors
The following is a summary of the principal risk factors in an
investment in the series 2000-1 notes. The remainder of this prospectus
provides much more detailed information about these risk factors. You
should consider the following risk factors in light of your investment
strategy in deciding whether to purchase the series 2000-1 notes.
The Characteristics of the Leases May Change Over Time
Under the terms of the indenture, during the revolving period,
collections allocated to the series 2000-1 notes may be used by us
to acquire additional leases allocated to our special unit of
beneficial interest in the origination trust. Although additional
leases must meet eligibility criteria, the additional leases may be
different from the leases already allocated to our special unit of
beneficial interest in the origination trust. The additional
leases may have different lessees, vehicle types and interest rate
provisions. Consequently, the overall characteristics of the
leases may change significantly with the addition of additional
leases arising under the existing master lease agreements and/or
new master lease agreements or consumer leases with new lessees.
The servicer is obligated to originate new leases and lease
agreements in accordance with its credit and collection policies,
however, these policies permit a wide variety of lessees, vehicle
types and interest rate provisions and the servicer may amend these
policies from time to time provided that the amendments would not
have a material adverse effect on the collectibility of amounts
owing under the leases or on our interests or those of the
indenture trustee in the leases. It is possible that any
differences in the characteristics of the additional leases from
the characteristics of the leases already allocated to our special
unit of beneficial interest in the origination trust may be
accompanied by delinquencies and losses on these additional leases
that may exceed those on the initial leases.
Declines in Market Value of Leased Vehicles Could Reduce Payments to You
Closed-End Leases
The lessees under the closed-end leases will not be obligated to
make a payment if the proceeds from the sale of the related
vehicles at lease termination, plus any related fees or penalties,
are less than the stated residual values of those vehicles. If the
market value of a vehicle at lease termination is less than the
stated residual value of that vehicle, we will suffer a loss.
A lessee under a closed-end lease may terminate its lease at any
time upon the payment by the lessee of an amount equal to 50% of
any unpaid rent for the remaining scheduled lease term. If the sum
of that payment and the market value of the vehicle at that time is
<PAGE>
less than the stated residual value of the vehicle, we will suffer
a loss.
Vehicles Ordered At Lessee Request
A lessee under a lease may order a vehicle and later decide not to
accept the vehicle for lease. If a vehicle is rejected, the
servicer will sell the vehicle in accordance with its policies and
procedures. If the market value of that vehicle is less than the
cost to us of the vehicle, we will suffer a loss.
Charged-off Leases
If a lessee defaults under its lease and the lease is charged-off,
the only source of payment for amounts that we expected to be paid
on that lease will be the income and proceeds from the disposition
of the related vehicles and any deficiency judgment against the
lessee. If the market values of the vehicles decline faster than
the lease balances of the related leases, plus in the case of a
closed-end lease, the stated residual values of the related
vehicles, the servicer may not recover the entire amount due on a
charged-off lease plus, in the case of a closed-end lease, the
stated residual values of the related vehicles, and we may suffer a
loss.
Losses on closed-end leases, rejected vehicles and charged-off
leases may deplete the protection afforded to you by the
overcollateralization, the reserve account and amounts on deposit
in the gain on sale account and may result in a shortfall in
payments on your series 2000-1 notes. The occurrence of any event
which has or can be expected to have an adverse impact upon the
wholesale market for new or used vehicles may increase the severity
of these losses.
Repayment of Your Series 2000-1 Notes is Limited to Our Assets
Your series 2000-1 notes are our obligations only and you will have
recourse for payments on your series 2000-1 notes solely to the
collateral pledged to the indenture trustee for the benefit of the
holders of each series of notes issued under the indenture,
including your series 2000-1 notes, and the collateral pledged to
the indenture trustee for the benefit of the holders of the series
2000-1 notes only. We will not have any significant other assets.
The amount on deposit in the reserve account for your benefit will
be limited. If the amount on deposit in the reserve account is
depleted, you will depend solely on the remaining collateral to
make payments on your series 2000-1 notes. The collectibility of
amounts payable under the leases and in respect of the receivables
generated by Vehicles Management Services in its fleet management
business will depend on the willingness and ability of the obligors
under the leases and the receivables to make timely payment of
their obligations. General economic conditions, the obligors'
financial condition and other similar factors will affect the
<PAGE>
obligors' ability to satisfy their obligations under the leases and
the receivables.
Repayment of Your Series 2000-1 Notes May be Dependent On Payments Made
Under the Interest Rate Caps
If we do not receive the payments that we expect to receive under
our interest rate caps, we may not have adequate funds to make all
payments to you when due.
You May Receive Principal Payments Earlier or Later than Anticipated
Amortization Events
If one of the specified amortization events occurs, you will begin
to receive payments of principal on the first payment date
following the month during which that event occurred. Amounts
available to pay principal on your series 2000-1 notes will be
distributed to the holders of the series 2000-1 notes on a pro rata
basis until such time as the series 2000-1 notes have been paid in
full. You will bear any reinvestment risk due to the early payment
of the principal of your series 2000-1 notes. If an amortization
event occurs, the average life of your series 2000-1 notes could be
significantly reduced.
The specified amortization events will include:
- the failure to maintain the required amount of
overcollateralization for two or more business days,
- the failure to have the required amount on deposit in the
yield supplement account for two or more business days,
- the failure to have the required amount on deposit in the
reserve account for two or more business days,
- the three month rolling average of the rates at which the
leases allocated to our special unit of beneficial interest in
the origination trust are charged-off is more than ___%,
- the three month rolling average of losses upon sale of the
vehicles subject to the closed-end leases allocated to our
special unit of beneficial interest in the origination trust
is more than ___%,
- the three month rolling average of losses upon sale of
rejected vehicles allocated to our special unit of beneficial
interest in the origination trust is more than ___%,
- the three month rolling average of the leases allocated to our
special unit of beneficial interest in the origination trust
that are delinquent for 60 days or more is more than ___%
<PAGE>
- during the revolving period, there is at least $10,000,000 on
deposit in the principal collection subaccount for the series
2000-1 notes on two consecutive payment dates, or
- the occurrence of an event of default with respect to your
series 2000-1 notes under the indenture.
For more information about the amortization events, see
"Description of the Series 2000-1 Notes--Payment of Principal--
Amortization Events".
--Failure to Maintain Sufficient Leases
The lessees under the open-end leases may terminate their leases
and the related vehicles sold at any time after the one year
anniversary of the lease commencement date and the lessees under
the closed-end leases may terminate their leases and the related
vehicles sold at any time. We can give you no assurance that the
origination trust will acquire additional vehicles to become
subject to the existing master lease agreements or enter into
additional master lease agreements or consumer leases to be
allocated to our special unit of beneficial interest in the
origination trust. The rate at which lessees elect to terminate the
leases, at which they default on the leases and at which they lease
additional vehicles under the master lease agreements will be
influenced by various factors, including changes in customer
requirements, the level of casualty losses and the overall economic
environment. A significant decline in the aggregate cost of the
vehicles ordered at the request of lessees and the aggregate lease
balance of the leases allocated to our special unit of beneficial
interest in the origination trust could result in there being
$10,000,000 or more on deposit in the principal collection
subaccount for the series 2000-1 notes for two consecutive payment
dates. The ability of Vehicle Management Services, on behalf of the
origination trust, to originate new master lease agreements that
meet the eligibility criteria described in this prospectus, the
rate at which lessees lease vehicles under the master lease
agreements on terms that meet the eligibility criteria described in
this prospectus and the rate at which the lessees terminate the
existing leases will determine whether there will be sufficient
vehicles and leases allocated to our special unit of beneficial
interest in the origination trust.
--Failure to Maintain the Required Amount on Deposit in the Yield
Supplement Amount
Finance charges on the floating rate leases allocated to our
special unit of beneficial interest in the origination trust will
be calculated principally on the basis of a 30-day commercial paper
rate but also on the basis of a number of other floating rate
indices. The interest rate of your series 2000-1 notes is based on
one-month LIBOR. Changes in one-month LIBOR might not be reflected
in the commercial paper rate or other indices, resulting in a
<PAGE>
higher or lower spread, or difference, between the amount of
collections of finance charges on the floating rate leases and the
amounts of interest payable on your series 2000-1 notes and other
amounts required to be funded out of collections. If there is a
decline in the indices for determining the finance charges on the
floating rate leases which does not coincide with a decline in one-
month LIBOR, the amount that is required to be on deposit in the
yield supplement account will increase.
--Failure to Maintain the Required Amount on Deposit in Reserve
Account and Performance of the Leases
Vehicle Management Services' strategy of penetrating the small and
medium fleet market described under "Vehicle Management Services--
Fleet Management and Leasing Operations" may result in an increase
in the rates at which the leases are charged-off and we may incur
losses.
--Events of Default
An event of default will occur with respect to your series 2000-1
notes under the indenture, among other reasons, if we fail to pay
interest on any series of notes issued under the indenture when due
and that failure continues for five consecutive business days or if
we fail to pay the principal of any series of notes issued under
the indenture when due. For more information about the events of
default, see "The Indenture--Events of Default".
Payment Rates
If one of the specified amortization events does not occur earlier,
you will begin to receive principal payments on your series 2000-1
notes on the payment date in ____ 200_. In the absence of an
amortization event, on that payment date and each payment date
after that payment date, amounts available to pay principal on your
series 2000-1 notes will be distributed to the holders of the class
A-1 notes until such time as the class A-1 notes have been paid in
full and after the class A-1 notes have been paid in full to the
holders of the class A-2 notes until such time as the class A-2
notes have been paid in full.
The actual rate of amortization of principal of your series 2000-1
notes will depend on the rate at which the lessees make
depreciation payments under the leases allocated to our special
unit of beneficial interest in the origination trust, the rate at
which the lessees elect to terminate those leases and the rate at
which the vehicles relating to those leases are sold upon lease
termination. The rate at which those leases become charged-off
leases or are purchased by the servicer will also affect the actual
rate of amortization of principal because amounts in respect of
those leases will also be applied to the payment of principal of
your series 2000-1 notes.
<PAGE>
These depreciation rates and the rate at which the lessees elect to
terminate the leases will vary due to various factors, including
general economic conditions and economic and financial factors
affecting the lessees, industries and geographic regions, as well
as the specific terms of the leases. As a result, we cannot assure
you of the rate at which you can expect to receive payments of
principal on your series 2000-1 notes or that any class of your
series 2000-1 notes will be fully paid on or prior to any
particular payment date, including its final maturity date.
Prepayment of Class A-2 Notes
We may prepay the class A-2 notes, in whole but not in part,
without premium, on any payment date after the outstanding
principal amount of the class A-2 notes is less than or equal to
10% of the initial outstanding amount of the series 2000-1 notes.
You will bear any reinvestment risk due to the early payment of the
principal of your class A-2 notes.
Our Indirect Ownership of the Leases, the Vehicles and the Receivables
Could Result in Reduced Payments to You
Potential Claims of Third-Party Creditors on Assets of the
Origination Trust
Unlike many structured financings in which the holders of the
securities have a direct ownership interest or a perfected security
interest in the underlying assets being securitized, we do not
directly own the vehicles, the leases or the fleet management
receivables allocated to our special units of beneficial interest
in the origination trust and we do not have a security interest in
those assets. Instead, the origination trust is the legal
titleholder of the vehicles, the leases and the fleet management
receivables and we have a beneficial interest in those vehicles,
leases and fleet management receivables through our ownership of
the special units of beneficial interest in the origination trust.
The origination trust is not expected to have any significant
obligations to third parties. However, our rights to receive the
cash flows from the leases, the vehicles and the fleet management
receivables may be subordinated to the claims of third-party
creditors of the origination trust.
--Liabilities Arising Out of the Origination Trust Assets
In connection with other financings, Raven Funding may in the
future create and sell or pledge special units of beneficial
interest in the origination trust other than our special units of
beneficial interest in the origination trust, as described more
fully under the caption "The Origination Trust and the Servicing
Agreement--Origination Trust". Under the agreement creating the
origination trust and the Delaware state statute under which the
origination trust was created, the liabilities of the origination
trust which relate to origination trust assets allocated to a
<PAGE>
particular special unit of beneficial interest will be allocated to
that special unit of beneficial interest and paid solely from the
origination trust assets allocated to that special unit of
beneficial interest. As a result of this allocation, any uninsured
and unindemnified liability to third parties arising from or in
respect of the origination trust assets allocated to our special
units of beneficial interest in the origination trust will be
satisfied out of those origination trust assets. You could suffer
a loss if any of those liabilities are satisfied out of the
origination trust assets allocated to our special units of
beneficial interest in the origination trust.
In addition, you could suffer a loss if a court chose not to
enforce the allocation provisions in the agreement creating the
origination trust and allow the satisfaction of liabilities
relating to origination trust assets not allocated to our special
units of beneficial interest out of the origination trust assets
allocated to our special units of beneficial interest in the
origination trust.
--ERISA Liabilities
All of the origination trust assets, including the assets allocated
to our special units of beneficial interest in the origination
trust, could become subject to liens in favor of the Pension
Benefit Guaranty Corporation to satisfy obligations arising under
the Employee Retirement Income Security Act of 1974 or ERISA of any
member of an "affiliated group" which includes Vehicle Management
Services and its affiliates under employee benefit plans. Those
liens would have priority over our interests and those of the
indenture trustee in the origination trust assets allocated to our
special units of beneficial interest in the origination trust.
Vehicle Management Services and its affiliates currently have no
unfunded liabilities under ERISA, but we cannot assure you that
Vehicle Management Services and its affiliates will continue their
current level of funding in the future. If they have unfunded
liabilities under ERISA in the future, the ratings of the series
2000-1 notes may be downgraded and you could suffer a loss if those
liabilities are satisfied out of the origination trust assets
allocated to our special units of beneficial interest in the
origination trust.
--Vicarious Tort Liability
The origination trust and the origination trust assets are and will
continue to be involved in litigation arising from the origination
trust's ownership of the vehicles subject to the leases and may
become subject to liability as a result of that ownership. State
laws differ as to whether anyone suffering injury to person or
property involving a motor vehicle may bring an action against the
owner of the motor vehicle merely by virtue of that ownership. The
laws of some states may hold the origination trust liable for the
<PAGE>
negligent use by the lessees and their employees of the vehicles.
In addition, actions by third parties might arise against the owner
of a vehicle based on legal theories other than negligence, such as
product defect or improper vehicle preparation.
You could suffer a loss if the lessees fail to indemnify the
origination trust for any liabilities arising from the origination
trust's ownership of the vehicles under the leases and the
liabilities exceed the amount of the contingent excess liability
insurance maintained by the origination trust to cover this risk.
Insolvency or Bankruptcy of Vehicle Management Services
Could Result in Delayed or Reduced Payments to You
If Vehicle Management Services were to become subject to bankruptcy
or other insolvency proceedings, a court could conclude that
Vehicle Management Services owns our special units of beneficial
interest in the origination trust or owns some of the leases and
the related vehicles and the fleet management receivables allocated
to our special units of beneficial interest by:
- treating Vehicle Management Services and the origination trust as
the same entity for bankruptcy purposes,
- determining that Vehicle Management Services and/or PersonaLease
still own, and that Raven Funding holds a security interest in,
those leases and the related vehicles that Vehicle Management
Services and PersonaLease transferred to Raven Funding and that
Raven Funding transferred to the origination trust on June 30,
1999 in connection with the financing of the acquisition by Avis
Group Holdings of Vehicle Management Services and its affiliates,
- determining that Vehicle Management Services still owns, and that
Raven Funding holds a security interest in, those equipment
leases and the related equipment that Vehicle Management Services
transferred to Raven Funding and that Raven Funding transferred
to the origination trust on October 28, 1999 in connection with
our issuance of the series 1999-2 notes,
- determining that Vehicle Management Services still owns, and that
Raven Funding holds a security interest in, the fleet management
receivables that Vehicle Management Services transfers to Raven
Funding and that Raven Funding transfers to the origination trust
from time to time, or
- treating Vehicle Management Services and Raven Funding as the
same entity for bankruptcy purposes and determining that Raven
Funding still owns the leases, the related vehicles and the fleet
management receivables transferred to the origination trust as
described above or our special units of beneficial interest in
the origination trust.
<PAGE>
Our Issuance of Additional Series May Affect the Timing
of Payments to You
We have issued and may issue additional series of notes from time
to time. We may issue an additional series of notes with terms
that are different from your series of notes without your prior
review or consent. It is a condition to our issuance of each new
series of notes that each rating agency that has rated an
outstanding series of notes confirm in writing that the issuance of
the new series of notes will not result in a reduction or
withdrawal of its rating of any outstanding series of notes. The
rating agency confirmation will be based primarily on our ability
to pay principal by the final maturity date and interest on each
payment date, but the rating agency will not consider how the terms
of a new series of notes could affect the timing and amounts of
payments on your series of notes. For more information about our
issuance of additional series of notes, see "The Indenture--
Issuance of Additional Series".
Dependence on Computer Systems Owned By Cendant Corporation Could
Result in Delayed or Reduced Payments to You
In connection with the acquisition by Avis Group Holdings of
Vehicle Management Services and its affiliates from Cendant
Corporation, Cendant Corporation agreed to provide to Vehicle
Management Services access to its mainframe and information
technology resources until December 2001. All of the data relating
to the leases, related vehicles and fleet management receivables is
currently partially resident on a mainframe computer owned and
operated by Cendant Corporation. We do not know whether Vehicle
Management Services will need further access to Cendant
Corporation's mainframe and information technology resources after
December 2001. If it does and is unable to obtain that access on
commercially reasonable terms, its ability to service the leases,
the related vehicles and the fleet management receivables, to
originate fleet management receivables and to originate new leases
on behalf of the origination trust and its financial condition
could be materially and adversely impacted. In addition, if
Vehicle Management Services is prevented from having access to its
data on Cendant Corporation's mainframe computer for any reason
prior to December 2001, including a failure of the computer system,
its ability to service the leases, the related vehicles and the
fleet management receivables, to originate fleet receivables and to
originate new leases on behalf of the origination trust and its
financial condition could be materially and adversely impacted.
You May Not Be Able to Resell Your Series 2000-1 Notes
The underwriters may assist in resales of any class of the series
2000-1 notes but they are not required to do so. A secondary
market for your series 2000-1 notes may not develop. If a
secondary market does develop, it might not continue or it might
not be sufficiently liquid to allow you to resell your series 2000-
1 notes.
<PAGE>
Withdrawal or Downgrading of the Initial Ratings of the Series 2000-1
Notes Will Affect the Prices of the Series 2000-1 Notes Upon Resale
It is a condition to our issuance of the series 2000-1 notes that
the series 2000-1 notes be rated in the highest rating category by
either Standard & Poor's or Moody's. These ratings will reflect
the assessment of each of the rating agencies of the likelihood
that the holders of the series 2000-1 notes will receive the
payments of interest on the series 2000-1 notes on each payment
date and the payment of principal of the series 2000-1 notes on the
final maturity dates. The ratings will be based primarily on an
assessment of our special units of beneficial ownership in the
origination trust, the initial level of overcollateralization
supporting the notes, the amounts to be held in the reserve account
and the yield supplement account and the interest rate caps that we
will have obtained from The Chase Manhattan Bank and Bank of
America, N.A. in respect of the leases. A rating agency may change
its rating of the series 2000-1 notes after the series 2000-1 notes
are issued if that rating agency believes that circumstances have
changed. Any change in a rating will likely affect the price that
a subsequent purchaser would be willing to pay for your series
2000-1 notes.
<PAGE>
Use of Proceeds
We will use $_______ of the net proceeds from the sale of the
series 2000-1 notes to repay in part our series 1999-3 notes and $_______
of the net proceeds to make an initial deposit into the reserve account.
As of ________, 2000, there were $___________ of our series 1999-3 notes
outstanding and interest accrued on those notes during the most recent
interest period then ending at an average rate per annum equal to ____%.
A number of multi-seller commercial paper conduits hold the series 1999-3
notes. See "Underwriting".
Greyhound Funding
General
We were formed on June 24, 1999 as a Delaware limited liability
company under our LLC Agreement for the purpose of:
- issuing notes under the Indenture,
- issuing preferred membership interests under our LLC
Agreement,
- acquiring the Fleet Receivable SUBI Certificate, the Lease
SUBI Certificate and the additional vehicles and related
leases allocated to the Lease SUBI from time to time by
Raven Funding,
- pledging our assets to secure the notes under the Indenture,
- making payments on our notes and preferred membership
interests and
- engaging in other related transactions.
We will not engage in any other business activity.
Raven Funding is our sole common member. Tony Wong, an employee
of Global Securitization Services, LLC, has agreed to act as our special
member. We will admit Mr. Wong as our non-economic member only if Raven
Funding is no longer our common member. Prior to that time, Mr. Wong
will not be our member.
Selected Financial Data
The selected financial data for the period from June 24, 1999
(our inception) through December 31, 1999 are derived from our financial
statements which have been audited by Deloitte & Touche LLP, independent
auditors, and are included elsewhere in this prospectus. The selected
financial data for the three months ended March 31, 2000 are derived from
unaudited financial statements included in this prospectus and include
all adjustments that we consider necessary for a fair presentation of the
financial statements.
<PAGE>
<TABLE>
Period from
June 24, 1999 Three
(inception) Months
Through Ended
December 31, 1999 March 31, 2000
----------------- --------------
<C> <S> <S>
(in thousands)
Statement of Income Data:
Total Income . . . . . . . . . . . $106,547 $55,585
Total Expenses, net . . . . . . . . 70,898 38,337
Net Income . . . . . . . . . . . . $35,649 $17,248
Earnings to Fixed Charges: 1.51 1.45
As of As of
December 31, 1999 March 31, 2000
----------------- --------------
(in thousands)
Balance Sheet Data:
Cash and Cash Equivalents . . . . . $93,531 $107,563
Restricted Cash . . . . . . . . . . 62,168 62,002
Special Unit of Beneficial
Interest in Fleet Receivables-
Related Party . . . . . . . . . . 80,000 80,000
Special Unit of Beneficial
Interest in Leases-Related
Party . . . . . . . . . . . . . 2,926,686 3,009,635
Total Assets . . . . . . . . . . . 3,173,151 3,269,963
Medium Term Notes . . . . . . . . 1,000,000 1,000,000
Variable Funding Notes . . . . . . 1,363,187 1,428,187
Total Liabilities . . . . . . . . 2,421,336 2,505,258
Members' Equity . . . . . . . . . 751,815 764,705
</TABLE>
Capitalization
The following table sets forth our capitalization as of
_________, 2000 on a pro forma basis giving effect to the issuance of
$________ of the series 2000-1 notes and the issuance of the series 2000-
1 preferred membership interests relating to the series 2000-1 notes and
the assumed repayment of $_______ of the series 1999-3 notes and the
assumed redemption of series 1999-3 preferred membership interests having
an aggregate liquidation preference of $________:
series 1999-2 notes . . . . . . . . . . . . . . . . $1,000,000,000
series 1999-3 notes . . . . . . . . . . . . . . . . $
series 2000-1 notes . . . . . . . . . . . . . . . . $
series 1999-2 preferred membership interests . . . $ 93,080,911
series 1999-3 preferred membership interests . . . $_____________
series 2000-1 preferred membership interests . . . $_____________
common membership interest . . . . . . . . . . . . $_____________
Total . . . . . . $_____________
Other Series of Notes and Senior Preferred Membership Interests.
The terms of the series 1999-2 notes are similar to those of the series
<PAGE>
2000-1 notes. The class A-1 notes of the series 1999-2 notes, in an
aggregate principal amount of $550,000,000, bear interest at one-month
LIBOR plus 0.32% per annum and the class A-2 notes of the series 1999-2
notes, in an aggregate principal amount of $450,000,000, bear interest at
one-month LIBOR plus 0.35% per annum. The revolving period for the
series 1999-2 notes will end on the March 2001 Period End Date, or
earlier, if an amortization event occurs with respect to the series 1999-
2 notes. The final maturity date of the class A-1 notes of the series
1999-2 notes is the October 2006 payment date and the final maturity date
of the class A-2 notes of the series 1999-2 notes is the October 2011
payment date. The terms of the series 1999-2 senior preferred membership
interests are similar to those of the series 2000-1 senior preferred
membership interests except that dividends accrue on those senior
preferred membership interests at a rate calculated based on the funding
costs of the multi-seller commercial paper conduit holding the series
1999-2 senior preferred membership interests and the bank providing
liquidity to that multi-seller commercial paper conduit.
Assuming the issuance of the series 2000-1 notes, as of the
closing date, the series 1999-3 notes will have a maximum invested amount
of $_____________. The series 1999-3 notes are held by a group of
multi-seller commercial paper conduits. The series 1999-3 notes have a
final maturity date of 125 months after the end of the revolving period
for the series 1999-3 notes. The initial term of the revolving period
for the series 1999-3 notes will expire on the October 2000 Period End
Date but may be extended. The series 1999-3 notes bear interest at a
variable rate based on the funding costs of the multi-seller commercial
paper conduits and the banks providing liquidity to those multi-seller
commercial paper conduits. The terms of the series 1999-3 senior
preferred membership interests are similar to those of the series 2000-1
senior preferred membership interests and are held by a subsidiary of
Raven Funding. This subsidiary financed the purchase of the series 1999-
3 senior preferred membership interests by issuing its own notes and
preferred membership interests to a group of multi-seller commercial
paper conduits. Dividends accumulate on the series 1999-3 senior
preferred membership interests at one-month LIBOR plus 1.70% per annum.
LLC Agreement
Management. Under our LLC Agreement, our managers exercise or
authorize the execution of our powers and manage our business and
affairs. Ordinarily we will have three managers, two chosen by Raven
Funding as holder of our common membership interest and one chosen by the
holders of our preferred membership interests. Our LLC Agreement
provides that if
- we fail to pay dividends in full on any series of preferred
membership interests for two consecutive dividend periods or
- an event of default under the Indenture occurs and is
continuing,
<PAGE>
the number of our managers increases to five and the holders of our
preferred membership interests are entitled to choose the two additional
managers.
Our LLC Agreement requires that at all times at least one of our
managers be an individual who is "independent," someone who is not and
never was
- a stockholder, member, partner, director, officer, employee,
affiliate, associate, creditor or independent contractor of
Avis Group Holdings, Inc., Avis Rent A Car System,
Inc.,Vehicle Management Services or any of their affiliates or
associates,
- any person owning directly or beneficially any outstanding
shares of common stock of Avis Group Holdings, Inc., Avis Rent
A Car System, Inc., Vehicle Management Services or any of
their affiliates, or a stockholder, director, officer,
employee, affiliate, associate, creditor or independent
contractor of such a beneficial owner or any of such
beneficial owner's affiliates or associates, or
- a member of the immediate family of any person described
above.
Joseph W. Weikel, Kevin Burns and Tony Wong are our current
managers. Each of Mr. Burns and Mr. Wong are employees of Global
Securitization Services, LLC and are "independent" managers. Joseph W.
Weikel is a Vice President and Assistant Secretary of Vehicle Management
Services.
Separateness. In order to preserve our separateness from any
other entity, our LLC Agreement obligates us to comply with a number of
covenants, including, among others, the following:
- our funds and other assets may not be commingled with those of
any other entity,
- we may not hold our self out as being liable for the debts of
any other entity and
- we are required to act solely in our limited liability company
name and through our duly authorized officers or agents in the
conduct of our business and to conduct our business so as not
to mislead others as to our identity or our assets.
Transfer of Common Membership Interest. Raven Funding may not
dispose of any part of its common membership interest in us.
<PAGE>
Management Agreement
We have entered into a Management Agreement with Global
Securitization Services who has agreed to perform certain administrative
functions for us. These functions include, among other things,
- designating persons available to serve as our managers and
officers,
- furnishing ordinary clerical and bookkeeping services,
- maintaining and preserving our status as a limited liability
company qualified to do business in the State of Delaware,
- managing the issuance and delivery of the notes,
- performing our obligations under the Transaction Documents
not required of the administrator and
- providing notice to the rating agencies if any "independent"
manager is removed or appointed.
Administration Agreement
We have no employees other than our managers. We have entered
into an Administration Agreement with Vehicle Management Services who has
agreed to perform our various administrative duties under the Base
Indenture, each indenture supplement and the Transfer Agreement,
including the preparation and delivery of reports, notices, documents
and other information that we are required to deliver or make available
under the Indenture. In addition, Vehicle Management Services has agreed
to perform other activities at our request in connection with our assets
and the Transaction Documents so long as those activities are reasonably
within its capability.
Vehicle Management Services, as administrator, has agreed to
indemnify and hold harmless us, the indenture trustee, Raven Funding and
their respective directors, officers, agents and employees for acts,
omissions or alleged acts or omissions arising out of the activities of
Vehicle Management Services, as administrator, other than acts, omissions
or alleged acts or omissions that constitute bad faith, negligence or
willful misconduct by the indemnified party.
Vehicle Management Services is not permitted to resign as
administrator under the Administration Agreement, and the Administration
Agreement will not terminate until the termination of the Indenture and
our LLC Agreement and the payment in full of all notes.
Vehicle Management Services, as administrator, is entitled to
receive a fee for each Monthly Period in an amount equal to 0.01% per
annum of the numerators used to determine the invested percentage with
respect to each series of notes outstanding on the last day of the
preceding Monthly Period, payable by the holders of the notes of each
series in accordance with the related indenture supplement on each
payment date. The portion of the fee payable to the administrator that
<PAGE>
is payable out of the Collections allocated to the series 2000-1 notes
will be equal to the product of
- 0.01% per annum
multiplied by
- the Required Asset Amount as of the first day of the preceding
Monthly Period
multiplied by the number of days in that Monthly Period divided
by 365 days or 366 days, as applicable.
Preferred Membership Interests
Issuance Requirements. We may issue senior preferred membership
interests and junior preferred membership interests in one or more series
relating to any series of notes on the issuance date of that series of
notes or after that issuance date if a majority of our managers has
adopted an action specifying the following terms, among others, of that
series of preferred membership interests:
- the aggregate stated liquidation preference and
designation,
- the dividend rate,
- the issuance date,
- the rating agencies rating that series,
- the initial dividend payment date,
- the legal final redemption date, and
- identification of the related series of notes.
We are also required to obtain the written confirmation from each rating
agency rating each series of notes outstanding and each series of
preferred membership interests outstanding that the issuance of that
series of preferred membership interests will not result in the reduction
or withdrawal of the then current ratings of those series of notes and
preferred membership interests.
Priority. All of our preferred membership interests will rank
senior to the interest of the common member with respect to the right to
receive dividends or other distributions and the right to receive
payments out of our assets upon our voluntary or involuntary liquidation,
dissolution, winding-up or termination. All of our senior preferred
membership interests will rank senior to the interests of the holders of
junior preferred membership interests with respect to the right to
receive dividends or other distributions and the right to receive
<PAGE>
payments out of our assets upon our voluntary or involuntary liquidation,
dissolution, winding-up or termination.
Dividends. The holders of each series of preferred membership
interests are entitled to receive dividends at the applicable dividend
rate for each dividend period of the stated liquidation preference of
that series of preferred membership interests, calculated on the basis of
a 360-day year and the actual number of days in that dividend period. We
will declare and pay dividends on a series of preferred membership
interests out of Collections allocated to the related series of notes as
provided in the related indenture supplement and our LLC Agreement.
Series 2000-1 Senior Preferred Membership Interests. On the
closing date, we will issue a series of senior preferred membership
interests relating to the series 2000-1 notes, having an aggregate
liquidation preference of $___________, to a subsidiary of Raven Funding
who will finance the purchase of the series 2000-1 senior preferred
membership interests by issuing its own notes and preferred membership
interests to one or more multi-seller commercial paper conduits. The
proceeds of the sale of the series 2000-1 senior preferred membership
interests will be applied to redeem $________ of the series 1999-3 senior
preferred membership interests.
The dividend rate on the series 2000-1 senior preferred
membership interests for each dividend period will be one-month LIBOR
plus 1.70% per annum. The dividend periods for the series 2000-1 senior
preferred membership interests will correspond to the interest periods
for the series 2000-1 notes. We will declare and pay dividends on the
series 2000-1 senior preferred membership interests on each dividend
payment date if we have funds legally available for the payment of those
dividends and the amount of Collections released from the settlement
collection subaccount for the series 2000-1 notes for the payment of
those dividends is sufficient to permit the payment.
Series 2000-1 Junior Preferred Membership Interests. We will not
issue any series of junior preferred membership interests relating to the
series 2000-1 notes on the closing date but we may do so at a later date.
As a condition to our issuance of series 2000-1 junior preferred
membership interests, we will be required to obtain the written
confirmation from each rating agency rating each series of notes
outstanding and each series of preferred membership interests outstanding
that the issuance of that series of junior preferred membership interests
will not result in the reduction or withdrawal of the then current rating
of those series of notes or those series of preferred membership
interests. The issuance of series 2000-1 junior preferred membership
interests will result in an increase in the Yield Shortfall Amount.
<PAGE>
Raven Funding
General
Vehicle Management Services formed Raven Funding in June 1999 as
a Delaware limited liability company. Raven Funding is permitted to
engage in the following business activities:
- acting as the settlor and initial beneficiary of the
origination trust,
- acquiring and contributing vehicles to the origination
trust,
- entering into and performing its obligations under the
Transaction Documents, including, among others,
- our LLC Agreement,
- the Transfer Agreement,
- the Asset Purchase Agreement,
- the Receivables Purchase Agreement and
- the Origination Trust Documents,
- acting as the common member of one or more purchasers of our
preferred membership interests and
- engaging in related activities.
Raven Funding will not engage in any other business activity.
Vehicle Management Services is the sole economic member of Raven
Funding. Lisa B. Hunt, an employee of Global Securitization Services,
has agreed to act as Raven Funding's special member. The special member
is required to be an "independent" manager and will be admitted as a non-
economic member of Raven Funding if there is no longer an economic member
of Raven Funding. Prior to that time, Ms. Hunt will not be a member of
Raven Funding.
Vehicle Management Services chooses the managers of Raven Funding
and they manage the business and affairs of Raven Funding. Raven Funding
is required at all times to have at least two managers who are
"independent" managers. Currently, the managers of Raven Funding are F.
Robert Salerno, Kevin M. Sheehan, Joseph Weikel, Lisa B. Hunt and Bernard
J. Angelo. Ms. Hunt and Mr. Angelo, employees of Global Securitization
Services, are the "independent" managers. Mr. Salerno is the President
and Chief Operating Officer--Rental Car Group of Avis Group Holdings. Mr.
Sheehan is the President--Corporate and Business Affairs and Chief
Financial Officer of Avis Group Holdings. Mr. Weikel is a Vice President
and Assistant Secretary of Vehicle Management Services.
Raven Funding's limited liability company agreement obligates
Raven Funding to do all things necessary to be readily distinguishable
from Avis Group Holdings and its affiliates, including Vehicle Management
<PAGE>
Services, and maintain its existence separate and apart from that of Avis
Group Holdings and its affiliates, including, without limitation
- maintaining books and records separate from any
other entity,
- not commingling funds and other assets with those of
any other entity,
- maintaining separate cash management systems,
- practicing organizational formalities required by
law and its limited liability company agreement,
- maintaining at least two "independent" managers,
- not holding itself out as being liable for the debts
of any other entity and
- acting solely in its limited liability company name
and through its duly authorized officers or agents
so as not to mislead others as to its identity or
its assets.
Management Agreement
Raven Funding has entered into a management agreement with Global
Securitization Services, who has agreed to perform certain administrative
functions for Raven Funding. These functions include, among other
things,
- furnishing ordinary clerical and bookkeeping services,
- maintaining and preserving its status as a limited liability
company in the State of Delaware,
- preparing periodic management reports regarding the
financial health of Raven Funding and
- maintaining complete records of all transactions of Raven
Funding.
Administration Agreement
Raven Funding has no employees other than its managers. Raven
Funding entered into the Administration Agreement with Vehicle Management
Services who has agreed to perform various administrative duties of Raven
Funding under the Transfer Agreement, including the preparation and
delivery of all reports, notices, documents and other information that
Raven Funding is required to deliver. In addition, Vehicle Management
Services has agreed to perform other activities at the request of Raven
Funding in connection with the Transfer Agreement so long as those
activities are reasonably within its capability.
<PAGE>
Vehicle Management Services, as administrator, has agreed to
indemnify and hold harmless us, the indenture trustee, Raven Funding and
our and their respective directors, officers, agents and employees for
acts, omissions or alleged acts or omissions arising out of the activi-
ties of Vehicle Management Services, as administrator, other than acts,
omissions or alleged acts or omissions that constitute bad faith, negli-
gence or willful misconduct by the indemnified party.
Vehicle Management Services is not permitted to resign as
administrator under the Administration Agreement, and the Administration
Agreement will not terminate until the termination of the Indenture and
the payment in full of all notes.
Vehicle Management Services, as administrator, is entitled to
receive a monthly fee payable by Raven Funding on each payment date.
Capitalization
On June 30, 1999, Vehicle Management Services capitalized Raven
Funding with $381,531,550 of cash. Neither Vehicle Management Services
nor the special member of Raven Funding is required to make any
additional capital contributions to Raven Funding.
Vehicle Management Services
General
Vehicle Management Services and its affiliated companies provide
integrated card payment, vehicle leasing and value added vehicle
management services in North America and Europe, with leading market
shares across many of its product lines. Vehicle Management Services
provides comprehensive vehicle management solutions to its customers
which include over 31,000 companies and government agencies in North
America and Europe, including nearly one-third of the Fortune 500 and
approximately one-half of the FTSE 100 companies. Vehicle Management
Services' services consist of vehicle leasing and related asset-based
services and a broad range of fee-based services which include fuel and
maintenance cards, accident management and other vehicle-related
services, all of which are designed to allow clients to effectively
manage costs and enhance productivity.
On June 30, 1999, Avis Rent A Car System acquired Vehicle
Management Services and its affiliated companies from Cendant
Corporation. Avis Rent A Car System operates the second largest general
use car rental business in the world, based on total revenue and volume
of rental transactions. Avis Rent A Car System rents vehicles to
business and leisure travelers through approximately 723 rental locations
in the United States, Canada, Puerto Rico, the U.S. Virgin Islands,
Argentina, Australia and New Zealand.
Vehicle Management Services and its affiliated companies are
divided into three business units, PHH North America, PHH Europe and
Wright Express Corporation. Unless we say otherwise, our discussion of
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PHH North America is limited to the United States operations of Vehicle
Management Services and excludes the Canadian operations of PHH North
America and the operations of Wright Express and PHH Europe.
On April 18, 2000, Avis Group Holdings and BNP Paribas announced
the formation of a joint venture combining PHH Europe and Arval, the
vehicle management services business of BNP Paribas. BNP Paribas will
hold on 80% interest in the joint venture. Avis will retain a 20%
interest in PHH Europe, which will subsequently be converted to a similar
equity stake in Arval. The management of Vehicle Management Services
anticipates that the joint venture will enhance Vehicle Management
Service's competitive position in the global marketplace.
Vehicle Management Services and PersonaLease originated all of
the assets of the origination trust, other than the equipment leases and
the related equipment acquired by Vehicle Management Services from PHH
Financial Services on or prior to October 28, 1999. Vehicle Management
Services operates PHH North America's U.S. vehicle leasing and fee-based
servicing businesses. PHH Financial Services is a subsidiary of Cendant
Corporation engaged in equipment leasing. PersonaLease originates
consumer leases.
Vehicle Management Services' chief executive office is in Garden
City, New York and it maintains a regional/processing office in Hunt
Valley, Maryland.
Fleet Management and Leasing Operations
Vehicle Management Services' vehicle management services are
divided into two principal categories:
- asset-based products and services and
- fee-based products and services.
Asset-based products and services are the services clients
require to acquire, lease and dispose of vehicles. Vehicle Management
Services, through the origination trust, leases vehicles in the United
States. As is market convention, financing of the vehicle leases is
directly linked to several other asset-based products and services, such
as vehicle acquisition services, title and registration services, vehicle
remarketing and vehicle management consultation, including fleet policy
and vehicle recommendations.
Leases of cars and light duty trucks, such as sport utility
vehicles and other four wheel drive vehicles, account for a substantial
majority of the vehicles that Vehicle Management Services leases through
the origination trust. The remaining leases are leases of several types
of heavy equipment, such as heavy duty trucks, forklifts and other
similar equipment. Lease terms generally reach a maximum of 60 months on
cars and light duty trucks, but extend as long as 10 to 12 years for
medium/heavy duty trucks and other vehicles or equipment with longer
lives.
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The aggregate Unit Balance of Vehicle Management Services' leases
has grown from approximately $2.66 billion, as of December 31, 1996, to
approximately $2.95 billion as of December 31, 1999. Vehicle Management
Services' total vehicle leasing revenues were approximately $126.5
million after fleet costs for the year ended December 31, 1999,
consisting of $40.3 million of net interest income and $86.2 million of
lease related fees.
Fee-based products are designed to allow clients to manage
vehicle costs and enhance driver productivity. Vehicle Management
Services' main fee-based products are fuel services, maintenance services
and accident management. Vehicle Management Services also offers a
variety of other fee-based vehicle management products and services,
including the acquisition and remarketing of vehicles not under lease,
vehicle management outsourcing and miscellaneous fee-based services.
Vehicle leasing and directly related products and services are
frequently combined with other related fee-based products and services,
such as accident management, vehicle maintenance cards and fuel cards.
Through use of these related fee-based services, customers
- receive access to Vehicle Management Services' broad network
of vehicle-related suppliers and
- are able to access comprehensive information on their total
fleet operating costs and characteristics, enabling better
management of fleet operations.
Vehicle Management Services frequently cross-sells its asset-based and
fee-based products and services. Management of Vehicle Management
Services estimates that approximately 65% of its North American customers
use at least one fee-based product or service.
Vehicle Management Services' primary customers are Fortune 1000
companies, each of which has greater than 100 fleet vehicles under lease
and/or management. Vehicle Management Services focuses on cultivating
long-term relationships with its customers. Vehicle Management Services
services customers directly with its own sales, marketing and customer
relations professionals who are located throughout North America. The
maintenance card and accident management programs are supported by a
network of vehicle-related preferred suppliers, including nationally
recognized vehicle-related retail outlets. Additionally, Vehicle
Management Services fuel cards are accepted at locations throughout the
U.S.
Vehicle Management Services is a recognized industry leader in
the large fleet segment of the vehicle management market. Vehicle
Management Services has indicated that it will increase its focus on the
small and medium fleet segments of that market, coordinating its
marketing efforts with Avis Rent A Car System's vehicle rental
operations. Vehicle Management Services believes that these efforts will
result in increased volumes in these segments of the market.
<PAGE>
Vehicle Management Services utilizes three separate computer
systems to manage the leases and the fleet management receivables:
- an inventory system which tracks lease and vehicle related
data,
- a billing system which produces detailed integrated bills for
each customer and
- a receivables system which tracks receivables.
Vehicle Management Services' information technology professionals
have developed SPIN, a data warehouse that consolidates transaction-level
information on each fleet management product in an effort to help
customers manage their fleet operations. Vehicle Management Services
delivers information from SPIN to customers in a variety of formats via
PHH InterActive, an Internet-based fleet management software package.
Vehicle Management Services' computer systems are currently partially
resident on a mainframe computer owned and operated by Cendant
Corporation. Vehicle Management Services has access to these computers
under a technology services agreement that expires in December 2001.
For information about the risks to you from Vehicle Management Services'
dependence on this technology services agreement, see "Risk Factors--
Dependence on Computer Systems Owned by Cendant Corporation Could Result
in Delayed or Reduced Payments to You".
Lease Products and Services
Open-End Leases. Vehicle leases can be either open-end or
closed-end. The open-end leases are typically structured with a 12 month
minimum lease term, with month to month renewals after the end of the
minimum lease term. The open-end leases typically provide for rent
payments that include a depreciation component, an interest or finance
charge component, a monthly management fee and applicable rental taxes.
Vehicle Management Services depreciates vehicles on a straight line
basis, generally over 40, 45, 50 or 60 months, at the option of the
lessee, with 50 and 60 months being the most common tenors. The residual
risk on the value of the vehicle at the end of the lease term remains
with the lessee under a open-end lease, except for a small amount which
is retained by Vehicle Management Services to permit classification of
the lease as an operating lease under generally accepted accounting
principles. Vehicle Management Services has never suffered a loss
related to the retention of this small residual position in connection
with its open-end leases.
The interest or finance charge component on the open-end leases
is generally calculated on a floating rate basis, but may be based on a
fixed rate. Interest payments under the floating rate leases vary from
month to month in accordance with changes in the applicable rate index,
plus the agreed upon spread. Under the terms of substantially all of the
floating rate leases, the applicable floating rate index is a composite
of the interest rates at which PHH Corporation, Vehicle Management
Services' parent prior to its acquisition by Avis Group Holdings, issues
<PAGE>
commercial paper. For competitive reasons, Vehicle Management Services
has previously notified a significant number of the lessees under these
floating rate leases that the applicable floating rate index have been
changed to the rate on commercial paper set forth in Statistical Release
H.15(519), "Selected Interest Rates" published by the Board of Governors
of the Federal Reserve System.
Interest payments under the fixed rate leases are typically
based on a spread over two-year treasury bills fixed at the time the
lease was originated and remain constant for the life of that lease. The
lessee under a floating rate lease generally has the option to convert it
to a fixed rate lease (generally with interest payments based on a spread
over the two-year treasury bill rate at the time of fixing) on 30 days'
notice to Vehicle Management Services.
Closed-End Leases. The closed-end leases are structured with a
fixed term and the lessor retains the vehicle residual value risk at the
end of the lease term. The most prevalent closed-end lease terms are
24 months, 36 months and 48 months. The closed-end leases may be
terminated at any time during the term of the lease with 30 days' notice
and payment of a termination penalty. The closed-end leases typically
provide for a fixed monthly rental payment based on a rate schedule.
Vehicle Management Services sets the residual values under its closed-end
leases of cars and light-duty trucks at amounts less than or equal to the
estimates published in the Automotive Lease Guide, which is a publication
generally used within the automotive finance industry for setting car and
light-duty truck residual values.
Consumer Leases. PersonaLease originates consumer leases and has
traditionally marketed consumer leases through affinity groups or made
them available to employees or independent contractors of Vehicle
Management Services' customers or employees or agents of affiliates of
Vehicle Management Services. Consumer leases currently are not an active
operating strategy for Vehicle Management Services.
Equipment Leases. Vehicle Management Services generally makes
equipment lease products available only to customers who also lease cars,
light duty trucks and/or sport utility vehicles in an effort to meet all
of the vehicle leasing needs of its customers. While Vehicle Management
Services was owned by Cendant Corporation, equipment leases were
originated either directly by Vehicle Management Services or through PHH
Financial Services. PHH Financial Services is a subsidiary of Cendant
Corporation engaged in equipment leasing.
Lease Agreements. Vehicle Management Services generally uses
standard form documents for both its open-end and closed-end leases.
Except in the case of consumer leases, the standard forms are structured
as a master lease agreement with the customer that sets forth
non-economic terms that will apply to all vehicles leased by the customer
under that master lease agreement with separate new unit notices or lease
schedules for each individual vehicle leased that set forth the lease
term, depreciation schedule, monthly rental payments, interest rate
<PAGE>
component terms and/or other specific transaction terms, in each case as
applicable to that vehicle.
The master lease agreements and consumer leases generally
- are "triple net" to the lessees (i.e., the lessees are
responsible for all incidental costs, such as insurance and
ongoing maintenance of the vehicles),
- provide that the lessees are obligated to pay all costs,
expenses, fees, charges and taxes incurred in connection with
the use, operation, titling and registration of the vehicles,
- allocate all risk of loss or damage to the vehicles to the
lessees,
- provide that the lessees are obligated to indemnify Vehicle
Management Services and the origination trust against all
claims, liabilities, costs and expenses relating to or arising
out of the possession, use or operation of the vehicles by the
lessees or their representatives,
- are assignable by the lessor and
- upon default by the lessee under the master lease agreement or
consumer lease, provide that the lessor has the right to
terminate the lease agreement and repossess and sell the
related vehicles.
Fleet Management Receivables
Fuel Cards and Related Services. Vehicle Management Services
provides customers with fuel card programs which facilitate the payment,
monitoring, and control of fuel purchases. Fuel is typically the single
largest fleet-related operating expense and generally accounts for over
70% of total fleet-related operating expenses. By using Vehicle
Management Services' fuel cards, Vehicle Management Services' customers
receive the following benefits:
- access to more fuel brands and outlets than other private
label corporate fuel cards,
- point-of-sale processing technology for fuel card transactions
that enhances customers' ability to monitor purchases and
- consolidated billing and access to other information on fuel
card transactions, which assists customers with evaluation of
overall fleet performance and costs.
The fleet management receivables include the receivables arising
under Vehicle Management Services' private label fuel card accounts of
customers located in the United States. The fleet management receivables
do not include any fuel service receivables generated by Wright Express
<PAGE>
or any receivables generated in respect of the "one card" product
discussed below. Vehicle Management Services provides private label fuel
cards principally to its existing asset-based customers.
In 1997, Vehicle Management Services initiated a trial issuance
of a multi-purpose (e.g., fuel, maintenance, travel and entertainment,
etc.), co-branded MasterCard for its customers. The "one card" product
combines travel and entertainment and the corporate purchasing capability
of the MasterCard platform with Vehicle Management Services' fuel card
functionality.
Maintenance Charge Cards and Related Services. Vehicle Management
Services offers customers vehicle maintenance charge cards that are used
to facilitate vehicle repairs and maintenance payments. The vehicle
maintenance cards provide customers with benefits such as
- negotiated discounts of up to 40% off retail prices through
Vehicle Management Services' supplier network,
- access to Vehicle Management Services' in-house team of
certified maintenance experts that monitor card transactions
for policy compliance, reasonableness and cost effectiveness
and
- inclusion of vehicle maintenance card transactions in a
consolidated information and billing database that helps
customers evaluate overall fleet performance and costs.
Vehicle Management Services maintains an extensive network of
service providers throughout the United States to improve ease of use by
its customers. The fleet management receivables include receivables for
products and services charged under Vehicle Management Services' vehicle
maintenance charge cards issued to customers located in the United
States.
The vehicle maintenance charge cards are used at Vehicle
Management Services' network of preferred vehicle-related suppliers. The
network includes many "national account" suppliers, including The
Goodyear Tire & Rubber Company, Bridgestone/Firestone Inc., Jiffy Lube
International, Inc. and Safelite Glass Corporation. Customers typically
pay Vehicle Management Services a monthly fee for use of the vehicle
maintenance charge cards.
In conjunction with its vehicle maintenance charge cards, Vehicle
Management Services offers its customers a vehicle maintenance management
system. Each time a vehicle maintenance charge card is used for a
purchase exceeding an agreed-upon dollar limit at an authorized
vehicle-related supplier location, the supplier's maintenance personnel
are required to review the order by phone with one of Vehicle Management
Services' maintenance specialists. Before authorizing a maintenance
purchase, the maintenance specialist considers the particular vehicle's
maintenance history and warranty status and the customer's particular
maintenance spending policy. This process improves compliance with the
<PAGE>
customer's maintenance policies while reducing operating costs and
enhancing overall fleet maintenance levels. After each transaction,
Vehicle Management Services stores the maintenance charge card activity
in its SPIN data warehouse, thereby assisting its customers in the
comprehensive long-term tracking of vehicles and drivers.
Accident Management Services. Vehicle Management Services
provides its customers with comprehensive accident management services,
such as
- providing prompt assistance after receiving the initial
accident report from the driver by facilitating emergency
towing services and car rental assistance,
- organizing the vehicle appraisal and repair process through a
network of preferred repair and body shops,
- coordinating and negotiating potential accident claims and
- entering accident and repair information into its SPIN data
warehouse for future management use.
Customers receive the following benefits from these accident management
services:
- 24-hour assistance from Vehicle Management Services' call
centers,
- access to Vehicle Management Services' network of repair and
body shops,
- expertise of Vehicle Management Services' damage specialists,
who monitor vehicle appraisals and repairs for cost-efficiency
and compliance with each customer's specific repair policy,
- services of Vehicle Management Services' claims experts, who
assess subrogation potential and, if necessary, attempt to
negotiate maximum recovery and
- significant additional information on vehicle and driver
performance.
Customers generally pay Vehicle Management Services for accident
management services on a per-incident basis. The fleet management
receivables include receivables for customer fees for accident management
services and for related repair purchases.
Vehicle Management Services. The fleet management receivables
also include billings for vehicle fleet management services provided to
customers with leased and non-leased vehicles, as well as billings for
the purchase of non-leased vehicles by fleet management customers.
<PAGE>
Origination and Underwriting Procedures
Sales Origination. Vehicle Management Services' sales
representatives are responsible for originating new business and for
servicing existing customers and identifying new business opportunities
with them. Most sales representatives work from Vehicle Management
Services' regional/processing office in Hunt Valley, Maryland. In
addition, Vehicle Management Services has three U.S. branch sales
offices, one each in Oakbrook, Illinois, Irvine, California and Irving,
Texas. Each sales representative is responsible for generating his or
her own leads by cultivating relationships with the fleet managers in the
assigned territory.
Credit Underwriting. Vehicle Management Services conducts credit
and financial analyses in connection with the origination of a master
lease agreement or the granting of an extension. To initiate the credit
approval process, a sales representative compiles a credit information
package for the prospective customer, including a business history of the
customer and at least three years of financial data, and makes a
recommendation on the term and proposed pricing of the financing. The
sales representative forwards each credit information package to Vehicle
Management Services' credit department. A credit analyst then performs
financial ratio analysis and reviews trends in operations and, in certain
instances, checks bank references and Dun & Bradstreet reports, and on
that basis, approves or declines the financing. In originating consumer
leases, Vehicle Management Services receives a credit application,
reviews the credit application and a credit bureau report, conducts an
income analysis and renders a credit decision.
The focus of Vehicle Management Services' credit analysis is
principally the credit of the lessee and/or any related guarantor even
though the leased vehicles serve as security for the related leases. In
reviewing the credit information package, the credit analyst assigned to
the account performs an analysis of financial ratios. Ratios developed
are both quantitative and qualitative, and include debt to cash flow
ratios, liquidity ratios, fixed charge coverage ratios and leverage
ratios. The ratios are then benchmarked against industry standards.
Although credit enhancements are rarely used, Vehicle Management Services
will consider letters of credit, cash deposits, parent or affiliate
guarantees and limitations on the lease term to mitigate credit risk.
Vehicle Management Services establishes individual credit lines
for each customer, allowing the origination of additional leases under a
master lease agreement up to set limits. Tiered levels of credit approval
are required based upon the amount of credit extended and defined credit
quality criteria. The existing approval limits are based on the credit
criteria of the transaction, existing exposure and experience of Vehicle
Management Services management. In addition, customer accounts are
reviewed on at least an annual basis. The review contains, among other
items, current financial information, total existing credit exposure,
payment history and external ratings.
<PAGE>
Delivery and Lease Commencement. Once a master lease agreement
has been approved, a "new business activation" team is given
responsibility for customer order implementation. The customer will mail
or electronically send its detailed request for its fleet, including
number and model of cars, preferred color, option packages and delivery
destinations. The client's order is checked for completeness and sent to
the car manufacturer or, in certain cases, directly to a dealer. In 1999,
Vehicle Management Services purchased substantially all of its vehicles
from The Ford Motor Company, General Motors Corporation and
DaimlerChrysler Corporation.
Vehicle Management Services notifies a dealer in its network of
dealers in the geographic area of the customer's delivery destination
that it will be receiving a vehicle. The vehicle manufacturer will bill
Vehicle Management Services for a vehicle at the time that vehicle is
shipped to the dealer and electronically draft an account of Vehicle
Management Services an average of three days after that shipment. The
dealer is responsible for
- registering the title of the vehicle in the name of the
origination trust,
- preparing the vehicle for delivery,
- reporting any after market requests,
- arranging for delivery of the vehicle to the customer or
pick-up of the vehicle by the customer and
- obtaining the signed delivery receipt from the customer.
No lease of a vehicle is in force until the customer's employee or driver
signs the delivery receipt for the vehicle.
After delivery of a vehicle to a customer, the dealer is required
to submit a package to Vehicle Management Services that includes
documentation of title, signature of the driver accepting delivery of
the car and any other relevant information. Vehicle Management Services
enters the lease of the vehicle into its computer system after it has
received and reviewed the package. For the purpose of calculating the
aggregate amount of notes that we may issue, we treat a vehicle ordered
at the request of a customer but not yet subject to a lease according to
Vehicle Management Services' computer system as a vehicle not yet subject
to a lease even though that vehicle may have been accepted by that
customer. Lease expenses begin accruing at the time of delivery of the
vehicle to the customer.
In the rare instance in which a customer rejects a vehicle
purchased at its request upon delivery, Vehicle Management Services may
ask the dealer to repurchase the vehicle for inventory or may add the
vehicle to a small pool of unleased vehicles it maintains for emergency
replacement purposes. Generally, if a lessee experiences a loss from
theft or collision, Vehicle Management Services arranges for a rental car
<PAGE>
replacement while a new car is ordered. However, some clients want
immediate replacements. Vehicle Management Services provides an
immediate replacement from its pool of unleased vehicles or through its
dealer network. If a customer rejects a vehicle purchased at its request
upon delivery, Vehicle Management Services generally charges the customer
a fixed cancellation fee plus the amount of any losses incurred in
connection with the disposition of that vehicle.
Billing, Collection and Repossession
Vehicle Management Services generates monthly consolidated bills
for all of its services, including rental charges for the fleet and
fee-based charges for services such as fuel cards and repair of vehicles.
As most customers use at least one fee-based service in addition to fleet
leasing, a typical bill might include rental charges for the fleet, fuel
charges from a fuel card and repair charges from one of several network
suppliers of repair and maintenance services. Typical payment terms
include net 10, net 15 and net 30 day terms. If a customer makes a
partial payment of its bill, Vehicle Management Services will apply the
partial payment and continue to age the portion of the bill that remains
unpaid. All consolidated bill payments are received through a lockbox
account held in the name of the origination trust.
Because most payment delinquencies are due to administrative
delays or billing disputes, not credit problems, Vehicle Management
Services tends to contact its customers about delinquent payments in
order to try to reconcile the bill. Vehicle Management Services'
collection/reconciliation department performs this function. Vehicle
Management Services generally assesses a late fee equal to 1.5% per month
for past due accounts. Vehicle Management Services waives this late fee
in many instances in the course of its efforts to arrange for payment of
past due amounts.
Each master lease agreement and consumer lease provides that
Vehicle Management Services may terminate that lease agreement and
repossess the related vehicle or vehicles if the lessee defaults. Events
of default include
- the failure to make payment when due,
- the failure to perform its covenants or obligations under
the lease,
- certain events of bankruptcy or insolvency and
- in some cases, a change in the financial condition of a
lessee's affairs that substantially impairs Vehicle
Management Services' title to the leased vehicles or
increases Vehicle Management Services' credit risk.
If a customer defaults, Vehicle Management Services, on a case-by-case
basis, either designates the account for workout or repossesses the
leased vehicles.
<PAGE>
Open-End Leases and the "16/15 Rule". Amounts owing under
open-end leases accrue using a "16/15" rule. Vehicles that are delivered
from the 1st to the 15th of a month have a lease commencement date of the
first day of that month. Vehicles delivered on the 16th of the month or
later have a lease commencement date of the first day of the succeeding
month. Lease payments are initially billed at the beginning of the month
following the date that a signed delivery receipt is received by Vehicle
Management Services. If Vehicle Management Services receives the signed
delivery receipt after the Period End Date in a month, the customer will
be billed at the beginning of the second month following receipt.
Subsequently, Vehicle Management Services bills lease payments in
advance.
For example, a vehicle may be delivered to the dealer on May 10th
and to the customer before May 15th,, and Vehicle Management Services
receives the signed delivery receipt on May 25th. This lease will have a
lease commencement date of May 1st. Its first bill will be sent in late
June for receipt on or around July 1st, the end of the month after
Vehicle Management Services received the signed delivery receipt. This
bill will include three months of expenses, May, June and July. In
essence, the first bill contains a "back billed" amount for the entire
first month of May and the month of June, and includes an advance portion
to cover July.
At the end of the lease, the potential for either paying for two
unused weeks (delivery taken on the 15th, but lease commencement is the
1st) or for getting two weeks "free" (delivery taken on the 16th, but
lease commencement is the 1st of the following month) is reversed.
Amounts for a lease will cease accruing on the first of the month in
which the lease ends, assuming the lease ends on or before the 15th of
the month, or on the first of the month after the month in which the
lease ends, assuming the lease ends after the 15th.
Closed-End Leases. Vehicle Management Services bills amounts for
closed-end leases based on the actual number of days in a month that the
lessee has use of the leased vehicle.
Lease Termination and Vehicle Disposition
The open-end leases typically provide that, upon termination of
the lease, the lessor is obligated to sell the vehicle as soon as is
practicable. Vehicle Management Services, as servicer, arranges for the
sale of the vehicles on behalf of the origination trust, as lessor. Upon
the termination of a closed-end lease, Vehicle Management Services, as
servicer, arranges for the prompt sale of the vehicle for the account of
the origination trust, as lessor. Upon the termination of a closed-end
lease prior to its scheduled lease term, the lessee is required to pay
all past due rent, 50% of any unpaid rent for the remaining scheduled
lease term and all other amounts due and unpaid under the lease,
including any late payment charges or indemnities.
Vehicle Management Services remarkets vehicles coming off-lease
through various channels. In many cases, it offers the vehicle to the
<PAGE>
driver through a program agreed upon with the lessee. Often, the driver
takes advantage of this purchase option since he or she is familiar with
the vehicle and its history. If the driver does not want to exercise the
purchase option, Vehicle Management Services remarkets the vehicle either
through an auction or other wholesale or consignment programs. At dealer
and public auctions, Vehicle Management Services vehicles are clearly
identified and Vehicle Management Services representatives are present to
answer questions. Under consignment sale programs, dealers reserve space
on their lots for previously leased vehicles but do not pay Vehicle
Management Services for the vehicles until the vehicles are sold.
Insurance and Indemnification
Insurance. The master lease agreements and consumer leases
generally require the lessees to maintain automobile bodily injury and
property damage liability insurance that names the origination trust and
Vehicle Management Services as additional insureds and loss payees. The
insurance policies must provide minimum primary coverages of $250,000 per
person and $500,000 per occurrence for bodily injury and $100,000 per
occurrence for property damage. Each of these lease agreements further
requires the lessee to maintain collision and comprehensive insurance
covering loss and damage to the vehicles in an amount not less than the
actual cash value of the vehicles, with a deductible not to exceed
$1,000. The lessee is required to furnish Vehicle Management Services
with a certificate of insurance or other evidence of the required
insurance coverage. The master lease agreements and consumer leases
provide that lessees may self-insure for collision and comprehensive
insurance coverage with Vehicle Management Services' consent.
Vehicle Management Services outsources its insurance tracking
process to an independent company, Certificate Management Solutions,
which tracks certificates of insurance for all lessees. Insurance
certificates are initially provided to Vehicle Management Services at the
time that a new lessee becomes party to a master lease agreement or a
consumer lease to ensure that the lessee carries the minimum required
coverage as provided in the applicable lease agreement. Lessees provide
these certificates, along with updated certificates to Vehicle Management
Services from time to time, and are forwarded to Certificate Management
Solutions. Certificate Management Solutions provides a report of all
current client insurance information to Vehicle Management Services on a
regular basis. Certificate Management Solutions also attempts to obtain
certificates from lessees that are delinquent in providing updated
information and provides a report to Vehicle Management Services
detailing lessees that have failed to provide current information.
Certificate Management Solutions sends a 30-day advance notice before
expiration of a lessee's insurance coverage to the lessees and again
sends notice to the lessee upon expiration of insurance coverage.
Indemnification. Each master lease agreement and consumer lease
contains indemnification of Vehicle Management Services and the
origination trust by the lessee against all claims and liabilities of any
kind or nature and all costs and expenses (including attorneys' fees)
incurred in connection with, relating to or arising out of the
<PAGE>
possession, use or operation of each of the leased vehicles during the
period when the lessee is in possession of the vehicles.
In addition to the insurance required under the lease agreements
and the indemnities provided by the lessees, Vehicle Management Services
maintains excess coverage public liability insurance with unaffiliated
carriers for personal injury, death and property damage claims resulting
from the use of the leased vehicles in excess of $1,000,000 per
occurrence up to not less than $50 million per occurrence. For more
information about the insurance that Vehicle Management Services is
required to maintain, see "The Origination Trust and the Servicing
Agreement--The Servicing Agreement".
Historical Data
The following table sets forth delinquency data with respect to
aggregate billings of lease payments for all of Vehicle Management
Services' leases and fleet management receivables for the years ended
December 31, 1995 through December 31, 1999 and the three months ended
March 31, 1999 and March 31, 2000.
Delinquency Experience
<TABLE>
Three Months
Ended March 31, Year Ended December 31,
---------------- ------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<C> <S> <S> <S> <S> <S> <S> <S>
Percentage of Billings
Delinquent<F1><F2>:
30-59 Days . . . . . . . . . . . . . 0.95% 1.15% 1.43% 2.27% 1.78% 2.07% 3.43%
60 Days or More . . . . . . . . . . . 1.80% 2.35% 2.37% 2.76% 2.98% 2.44% 2.79%
Total 30 or More Days Delinquent . . 2.75 % 3.50% 3.80% 5.03% 4.76% 4.51% 6.22%
</TABLE>
<F1> The period of delinquency is based on the number of days
payments are contractually past due.
<F2> An average of the ratios, expressed as a percentage, for
each monthly billing period within the applicable period, of
the aggregate billings for all leases and all fleet
management receivables which were delinquent for the
applicable number of days as of the last day of that monthly
billing period to the sum of the aggregate billings for all
leases and all fleet management receivables which were
unpaid as of the last day of the preceding monthly billing
<PAGE>
period and the aggregate amount billed for all leases and
fleet management receivables during that monthly period.
The following table sets forth loss and recovery data with
respect to Vehicle Management Services' leases and fleet management
receivables for the fiscal years ended April 30, 1995 through April 30,
1997, the calendar years ended December 31, 1997, December 31, 1998 and
December 31, 1999 and the three months ended March 31, 1999 and March 31,
2000.
Loss and Recovery Experience
<TABLE>
Three Months Fiscal Year Ended
Ended March 31, Calendar Year Ended December 31, April 30,
-------------- -------------------------------- -----------------
2000 1999 1999 1998 1997 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
(dollars in thousands)
<C> <S> <S> <S> <S> <S> <S> <S> <S>
Ending Dollar Amount of
Leases<F1> . . . . . . . . . $3,014,601 $2,859,602 $2,946,761 $2,846,065 $2,858,590 $2,777,196 $2,675,198 $2,510,787
Total Billings for Period . . 500,892 498,429 1,954,603 2,040,893 1,924,948 1,754,422 1,622,564 1,476,267
Gross Losses<F2> . . . . . . 9 660 1,399 1,495 704 78 742 615
Recoveries . . . . . . . . . 1 0 251 40 188 90 123 54
Net Losses . . . . . . . . . 8 660 1,148 1,455 516 (12) 619 561
Net Losses as Percentage of
Ending Dollar Amount of
Leases<F3> . . . . . . . . 0.00% 0.09% 0.04% 0.05% 0.02% 0.00% 0.02% 0.02%
Net Losses as Percentage of
Total Billings for
Period<F3> . . . . . . . . 0.00% 0.13% 0.06% 0.07% 0.03% 0.00% 0.04% 0.04%
</TABLE>
-----------------
<F1> Based on the sum of all principal amounts outstanding under the
leases, including, in the case of closed-end leases, the stated
residual values of the related leased vehicles.
<F2> Gross Losses includes losses on fleet management receivables.
<F3> Annualized.
<PAGE>
The following table sets forth residual value performance data
for Vehicle Management Services' closed-end leases for the years ended
December 31, 1996 through December 31, 1999 and the three months ended
March 31, 1999 and March 31, 2000.
Residual Value Loss Experience
<TABLE>
Three Months
Ended March 31, Year Ended December 31,
--------------- -----------------------
2000 1999 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
<C> <S> <S> <S> <S> <S> <S>
Total Number of Closed-End Leases
Scheduled to Terminate . . . . . . . 780 983 3,295 3,655 3,520 2,942
Number of Returned Vehicles . . . . . . 826 1,020 3,657 3,966 4,048 3,483
Full Termination Ratio <F1> . . . . . . 105.90% 103.76% 110.99% 108.51% 115.00% 118.39%
Total Gain/(Loss) on Returned
Vehicles <F2> . . . . . . . . . . . . $(960,541) $(309,125) $(2,469,898) $(553,112) $3,029,468 $4,143,758
Average Gain/(Loss) Per Returned
Vehicle . . . . . . . . . . . . . . . $(1,163) $(303) $(675) $(139) $749 $1,190
Gain/(Loss) as a Percentage of Stated
Residual Values of Returned
Vehicles <F3> . . . . . . . . . . . . -10.70% -3.36% -6.72% -1.64% 8.82% 16.24%
</TABLE>
--------------------
<F1> The ratio of the number of returned vehicles sold during the period
to the number of vehicles scheduled, on their date of origination,
to terminate during the period, expressed as a percentage.
<F2> Includes fees received and expenses incurred to dispose of vehicles
and certain amounts received after the sale and disposition of the
vehicles.
<F3> The ratio of total gains/losses on returned vehicles during the
period to the stated residual values of those vehicles, expressed
as a percentage.
The following table sets forth data with respect to conversions
of Vehicle Management Services' floating rate leases to fixed rate leases
during the fiscal years ended April 30, 1995 through April 30, 1997, the
calendar years ended December 31, 1997, December 31, 1998 and December
31, 1999 and the three months ended March 31, 1999 and March 31, 2000.
<PAGE>
Conversions of Floating Rate Leases to Fixed Rate Leases
<TABLE>
Three Months Calendar Year Fiscal Year
Ended March 31, Ended December 31, Ended April 30,
--------------- ------------------ ---------------
2000 1999 1999 1998 1997 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
(dollars in thousands)
<C> <S> <S> <S> <S> <S> <S> <S> <S>
Dollar Amount of
Conversions for
Period<F1> . . . . . . $ 0 $17,583 $28,850 $100,173 $11,675 $6,270 $57,090 $9,061
Ending Dollar Amount
of Leases<F1> . . . . 3,014,801 2,859,602 2,946,761 2,846,065 2,858,590 2,777,196 2,675,198 2,510,787
Conversions as a
Percentage of Ending
Dollar Amount of
Leases . . . . . . . . 0.00%(2) 0.61%(2) 0.98% 3.51% 0.41% 0.23% 2.13% 0.36%
</TABLE>
----------------
<F1> Based on the sum of all principal amounts outstanding under the
leases, including, in the case of closed-end leases, the stated
residual values of the related leased vehicles.
<F2> Annualized.
<PAGE>
The following table sets forth data for Vehicle Management
Services' aggregate billings of fleet management receivables for the
years ended December 31, 1997, December 31, 1998 and December 31, 1999
and the three months ended March 31, 1999 and March 31, 2000.
Fleet Management Receivable Billing Experience
<TABLE>
Three Months
Ended March 31, Year Ended December 31,
--------------- -----------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
(dollars in thousands)
<C> <S> <S> <S> <S> <S>
Aggregate Billings . . . . . . . . . . . $192,803 $191,547 $724,412 $822,757 $747,923
Average Monthly Billings . . . . . . . . 64,268 63,849 60,368 68,563 62,327
Maximum Monthly Billings . . . . . . . . 69,715 68,753 68,753 79,346 70,441
Minimum Monthly Billings . . . . . . . . 59,017 59,066 51,277 60,182 58,003
</TABLE>
The data presented in the preceding tables are for illustrative
purposes only. We cannot assure you that the delinquency and loss
experience of the leases and the fleet management receivables allocated
to the Lease SUBI, the residual value performance of the vehicles subject
to the closed-end leases allocated to the Lease SUBI, the conversions of
floating rate leases allocated to the Lease SUBI to fixed rate leases and
billings of fleet management receivables will be similar to that set
forth above. A variety of economic, social, geographic and other factors
may influence delinquency and loss experience and residual value
performance, as well as the rate of conversions of floating rate leases
and the amount of billings of fleet management receivables.
<PAGE>
Characteristics of the Leases and Vehicles
On June 30, 1999, Raven Funding directed Vehicle Management
Services, as the UTI trustee, to allocate to the Lease SUBI
- all of the master lease agreements qualifying as Eligible Master
Leases and all of the consumer leases qualifying as Eligible
Consumer Leases as of June 19, 1999 held by the origination
trust,
- the vehicles subject to those lease agreements and
- all of the vehicles ordered at the request of the lessees party
to those master lease agreements.
Subsequent to June 30, 1999, Raven Funding has directed Vehicle
Management Services, as the UTI trustee, to allocate to the Lease SUBI
all additional master lease agreements qualifying as Eligible Master
Leases and all additional consumer leases qualifying as Eligible Consumer
Leases, together with the related vehicles, entered into by the
origination trust since June 19, 1999. In addition, after June 30, 1999,
Raven Funding has assigned to the origination trust and directed Vehicle
Management Services, as the UTI trustee, to allocate to the Lease SUBI
all vehicles ordered at the request of a lessee party to a master lease
agreement allocated to the Lease SUBI together with the lease
subsequently entered into by the origination trust for that vehicle.
On October 28, 1999, Raven Funding directed Vehicle Management
Services, as the UTI trustee, to allocate to the Lease SUBI master lease
agreements originated by PHH Financial Services and the related
equipment, having an aggregate Unit Balance as of _____, 2000 of
$_________. The equipment under these leases are heavy duty trucks,
forklifts and other similar equipment. These leases were originated by
PHH Financial Services in accordance with the same credit standards as
those applied by Vehicle Management Services and the forms of these
master lease agreements are substantially similar in all material
respects to the forms of master lease agreements used by Vehicle
Management Services.
On the _________ 2000 payment date, after giving effect to the
acquisition of additional fleet management receivables under the
Receivables Purchase Agreement, the origination trust held fleet
management receivables constituting Eligible Receivables with an
aggregate unpaid balance of $_________ as of ________, 2000.
The following tables contain certain statistical information for
the leases and vehicles allocated to the Lease SUBI as of ______, 2000.
The following information does not include vehicles ordered at the
request of lessees party to a master lease agreement allocated to the
Lease SUBI, having an aggregate cost of $____________, allocated to the
Lease SUBI as of that date. For the purposes of preparing the following
tables, we assumed the original term of each lease to be the period over
which the related vehicle is scheduled to be depreciated.
<PAGE>
Composition of Leases
Aggregate Unit Balance of Leases $___,___,___.__
Number of Leases _______
Average Unit Balance $_________
Range of Unit Balances $0 - ____________
Aggregate Unit Balance of Open-End Leases $________________
Aggregate Unit Balance of Floating Rate Leases $________________
Aggregate Lease Balance of CP Rate Index Floating Rate
Leases* $________________
Weighted Average Spread Over CP Rate .___%
Range of Spreads Over CP Rate 0.00% to ____%
Aggregate Unit Balance of Floating Rate Leases Indexed
to Floating Rates Other Than CP Rate $____________
Aggregate Unit Balance of Fixed Rate Leases $______________
Weighted Average Fixed Rate _____%
Range of Fixed Rates 0.000% to ______%
Weighted Average Original Lease Term _____ months
Range of Original Lease Terms _ to ___ months
Weighted Average Remaining Term _____ months
Range of Remaining Terms 0 to ___ months
Aggregate Unit Balance of Closed-End Leases $______________
Average Unit Balance of Closed-End Leases $_________
Range of Unit Balances of Closed-End Leases $0 - __________
Average Stated Residual Value of Leased Vehicles $_________
------------------
* The CP Rate Index Floating Rate Leases are floating rate leases
allocated to the Lease SUBI the floating rate of which is based on
the rate on commercial paper set forth in Statistical Release
H.15(519), "Selected Interest Rates" published by the Board of
Governors of the Federal Reserve System.
As of ________, 2000, the aggregate Lease Balances of the leases
allocated to the Lease SUBI with the lessee having the largest aggregate
Lease Balances was $__________, the aggregate Lease Balances of the
leases allocated to the Lease SUBI with the lessees having the five
largest aggregate Lease Balances was $____________ and the aggregate
Lease Balances of the leases allocated to the Lease SUBI with the lessees
having the ten largest aggregate Lease Balances was $____________.
Distribution of Leases by Original Lease Term
Percentage of
Aggregate
Original Lease Number of Aggregate Unit Balance
Term (months) Leases Unit Balances of Leases
-------------- --------- ------------- -------------
1 to 6
7 to 12
13 to 18
19 to 24
25 to 30
31 to 36
<PAGE>
37 to 42
43 to 48
49 to 54
55 to 60
61 to 66
67 to 72
73 to 78
79 to 84
85 to 90
91 to 96
103 to 108
109 to 114
115 to 120
Total
Distribution of Leases by Remaining Term
Percentage of
Aggregate
Remaining Number of Aggregate Unit Balance
Term (months) Leases Unit Balances of Leases
------------- --------- ------------- -------------
0 to 6
7 to 12
13 to 18
19 to 24
25 to 30
31 to 36
37 to 42
43 to 48
49 to 54
55 to 60
61 to 66
67 to 72
73 to 78
79 to 84
85 to 90
91 to 96
97 to 102
103 to 108
109 to 114
115 to 120
Total
Distribution of Leases by Unit Balance
Percentage of
Aggregate
Unit Number of Aggregate Unit Balance of
Balances Leases Unit Balances Leases
-------- --------- ------------- ---------------
$5,000.00 or less
$5,000.01 to $10,000.00
$10,000.01 to $15,000.00
<PAGE>
$15,000.01 to $20,000.00
$20,000.01 to $25,000.00
$25,000.01 to $30,000.00
$30,000.01 to $35,000.00
$35,000.01 to $40,000.00
$40,000.01 to $45,000.00
$45,000.01 to $50,000.00
$50,000.01 to $55,000.00
$55,000.01 to $60,000.00
$60,000.01 to $65,000.00
$65,000.01 to $70,000.00
$70,000.01 to $75,000.00
$75,000.01 to $80,000.00
$80,000.01 to $85,000.00
$85,000.01 to $90,000.00
$90,000.01 to $95,000.00
$95,000.01 to $10,000.00
Greater Than $100,000.00
Total
Distribution of Leases by State in whichLessees Are Located<F1>
Percentage of
Aggregate
Number of Aggregate Unit Balance of
State Leases Unit Balances Leases
----- --------- ------------- ---------------
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of
Columbia
Florida
Georgia
Hawaii
Idaho
Iowa
Illinois
Indiana
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
<PAGE>
Mississippi
Missouri
Montana
North Carolina
North Dakota
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
<F1> Based on billing address of lessee.
Distribution of Leases by Vehicle Type
Percentage of
Number of Aggregate Aggregate Unit
Vehicle Type Leases Unit Balances Balance of Leases
------------ --------- ------------- -----------------
Cars
Equipment
Forklifts
Heavy Duty Trucks
Light Duty Trucks
Medium Duty Trucks
Refrigerator Trucks
Trailers
Other
Total
<PAGE>
Identification of Top Ten Lessees by Industry
Percentage of
Primary Industry of Aggregate Aggregate
Lessee Unit Balances Unit Balance of Leases
------------------- ------------- ----------------------
Agricultural
Tobacco
Consumer Products
Chemical
Pharmaceutical
Child Care
Chemical
Security
Consumer Products
Manufacturing
Distribution of Floating Rate Leases bySpread Over CP Rate
Percentage of
Aggregate Unit
Number of Aggregate Balance of
Spread Rate Range Leases Unit Balances Leases
----------------- --------- ------------- --------------
.000% to .099%
.100% to .199%
.200% to .299%
.300% to .399%
.400% to .499%
.500% to .599%
.600% to .699%
.700% to .799%
1.000% to 1.099%
1.200% to 1.299%
1.500% to 1.599%
1.700% to 1.799%
2.000% to 2.099%
2.500% to 2.599%
Not Provided
Total
<PAGE>
Distribution of Fixed Rate Leases by Interest Rate
Percentage of
Aggregate
Number of Aggregate Unit Balance of
Interest Rate Range Leases Unit Balances Leases
------------------- --------- ------------- ---------------
Up to 4.25%
4.26% to 4.50%
4.51% to 4.75%
4.76% to 5.00%
5.01% to 5.25%
5.26% to 5.50%
5.51% to 5.75%
5.76% to 6.00%
6.01% to 6.25%
6.26% to 6.50%
6.51% to 6.75%
6.76% to 7.00%
7.01% to 7.25%
7.26% to 7.50%
7.51% to 7.75%
7.76% to 8.00%
8.01% to 8.25%
8.26% to 8.50%
8.51% to 8.75%
8.76% to 9.00%
9.01% to 9.25%
9.26% to 9.50%
9.51% to 9.75%
9.76% to 10.00%
10.01% to 10.25%
10.26% to 10.50%
10.51% to 10.75%
10.76% to 11.00%
11.01% to 11.25%
11.26% to 11.50%
11.51% to 11.75%
11.76% to 12.00%
12.01% to 12.25%
12.26% to 12.50%
12.51% to 12.75%
12.76% to 13.00%
13.01% to 13.25%
13.26% to 13.50%
13.51% to 13.75%
13.76% to 14.00%
14.01% and Greater
Total
<PAGE>
Maturity Assumptions
The Indenture provides that the holders of the series 2000-1
notes will not receive payments of principal until after the commencement
of the amortization period for the series 2000-1 notes.
Amortization Period
Beginning on the second payment date following the beginning of
the amortization period for the series 2000-1 notes, the indenture
trustee will deposit into the distribution account for the series 2000-1
notes for distribution to the holders of the series 2000-1 notes the
lesser of the Principal Payment Amount for that payment date and the
outstanding principal amount of the series 2000-1 notes. On that payment
date and each payment date after that payment date, the indenture trustee
will pay the amount deposited in the distribution account for the series
2000-1 notes for the payment of principal to the holders of the class A-1
notes until the class A-1 notes are paid in full and then to the holders
of the class A-2 notes until the class A-2 notes are paid in full. On
any payment date falling after the occurrence of an amortization event,
the indenture trustee will pay the amount deposited in the distribution
account for the series 2000-1 notes for the payment of principal to the
holders of the series 2000-1 notes on a pro rata basis until the series
2000-1 notes have been paid in full.
The amortization period for the series 2000-1 notes will begin on
the earlier of
- the close of business on the business day before the day on
which an amortization event is deemed to have occurred and
- the close of business on the Period End Date in ______ 200_
and
will end when the series 2000-1 notes are paid in full, all dividends and
other amounts owing in respect of the preferred membership interests
relating to the series 2000-1 notes have been paid in full and the
preferred membership interests relating to the series 2000-1 notes have
been redeemed in full. For information about the amortization events,
see "Description of the Series 2000-1 Notes--Payment of Principal--
Amortization Events".
Principal Payment Amount
The Principal Payment Amount on any payment date will equal the
product of
- the average daily Series 2000-1 Invested Percentage during
the preceding Monthly Period
multiplied by
- the sum of
<PAGE>
- for each lease allocated to the Lease SUBI an amount
equal to the sum of
- the decline in the Lease Balance of that lease
from the last day of the second Monthly Period
before that payment date to the last day of the
Monthly Period before that payment date
plus
- if that lease is a closed-end lease, the Net Book
Value of the vehicle subject to that lease if
that vehicle was sold or otherwise disposed of
after termination or expiration of the lease
during the Monthly Period before that payment
date
plus
- the aggregate cost of all vehicles ordered at the
request of a lessee party to a master lease agreement
allocated to the Lease SUBI that were sold or
otherwise disposed of after rejection by that lessee
during the Monthly Period before that payment date.
The Lease Balance of any lease that is considered to be a charged-off
lease by the servicer will be zero. A lease will be considered to be a
charged-off lease when it is or should have been charged-off by the
servicer in accordance with Vehicle Management Services' credit and
collection policies or when any scheduled lease rental payment is 270 or
more days past due.
The Principal Payment Amount for each payment date will vary with
the rates at which the lessees elect to depreciate the vehicles under the
leases allocated to the Lease SUBI and the rate at which the lessees
elect to terminate those leases and the related vehicles are sold. For
information about the depreciation rates available to the lessees under
the leases, see "Vehicle Management Services--Lease Products and
Services". These depreciation rates and the rate at which the lessees
elect to terminate the leases will vary according to a number of factors,
including general economic conditions and specific economic and financial
factors affecting the lessees, industries and geographic regions. As a
result, we cannot assure you of the rate at which you can expect to
receive payments of principal on your notes during the amortization
period for the series 2000-1 notes. If an amortization event occurs, the
average life of your notes could be significantly reduced. For more
information about the risk to you of prepayment, see "Risk Factors--You
May Receive Principal Payments Earlier or Later than Anticipated".
Other events may cause an accelerated payment of principal on the
series 2000-1 notes. We may pay principal on the series 2000-1 notes
faster if Vehicle Management Services or Raven Funding is obligated to
purchase any of the leases and vehicles allocated to the Lease SUBI as a
<PAGE>
result of a breach of representation or warranty. We may prepay the
class A-2 notes when the outstanding principal amount of the class A-2
notes is less than or equal to 10% of the initial principal amount of the
series 2000-1 notes. For information about when Vehicle Management
Services or Raven Funding is obligated to purchase leases and vehicles,
see "The Origination Trust and the Servicing Agreement--The Servicing
Agreement" and "Security for the Series 1999-2 Notes--Transfer
Agreement".
If we pay the principal of the 2000-1 notes faster than expected
for any of the reasons that we have discussed, you will bear the entire
reinvestment risk. The timing of payments on the leases allocated to the
Lease SUBI may also significantly affect the actual yield to maturity on
your notes. The yield on series 2000-1 notes purchased at a price other
than par will vary from the anticipated yield if the rate of payment on
the leases differs from the rate anticipated when the series 2000-1 notes
were purchased.
The following factors will affect the expected yield on your
series 2000-1 notes:
- the purchase price paid for your series 2000-1 notes,
- the rate of payments on the leases allocated to the Lease
SUBI which will vary with the rates at which the lessees
elect to depreciate the vehicles under the leases and the
rate at which the lessees elect to terminate the leases and
the related vehicles are sold and
- the assumed reinvestment rate.
Prepayment Models
The following information is given solely to illustrate the
effect of different prepayment rates on the weighted average life of the
series 2000-1 notes under the assumptions that we state and is not
intended to be a prediction of the prepayment rates of the leases
allocated to the Lease SUBI during the life of the series 2000-1 notes.
We prepared this information using the Absolute Prepayment Model,
a prepayment model that assumes a constant percentage of the original
number of leases in a pool prepay each month. For example, in a pool of
leases originally containing 10,000 leases, a 1% ABS rate means that 100
leases prepay each month.
Our base payment rate assumption assumes that, based on the
additional assumptions in the next paragraph, the original Lease Balance
of a lease allocated to the Lease SUBI and the original Lease Balance of
any additional lease allocated to the Lease SUBI will prepay as follows:
- 0.10% ABS for the first six months of the life of that
lease,
<PAGE>
- 0.25% ABS for the seventh through twelfth month of the life
of that lease,
- 0.75% ABS for the thirteenth through eighteenth month of the
life of that lease,
- 1.60% ABS for the nineteenth through twenty-fourth month of
the life of that lease and
- 2.00% ABS following the twenty-fourth month of the life of
that lease until the original outstanding Lease Balance of
that lease has been paid in full.
Neither an ABS rate nor our base payment rate assumption purports
to be a historical description of prepayment experience or a prediction
of the anticipated prepayment rate. We cannot assure you that the leases
allocated to the Lease SUBI will prepay at the levels of our base payment
rate assumption or at any other rate.
We prepared the tables set forth below based on additional
assumptions, including that
- all collections on the leases allocated to the Lease SUBI
(including monthly lease payments and proceeds of vehicle
sales) are received timely, and none of those leases are
ever delinquent or in default,
- Vehicle Management Services and Raven Funding do not
purchase any of the leases or vehicles allocated to the
Lease SUBI,
- none of the leases allocated to the Lease SUBI are
considered to be charged-off leases,
- the sale proceeds of the vehicles subject to the closed-end
leases allocated to the Lease SUBI are at least equal to the
stated residual values of those vehicles,
- there are no vehicles ordered at the request of a lessee
party to a master lease agreement allocated to the Lease
SUBI,
- we do not exercise our option to prepay the class A-2 notes,
- we make all payments of principal and interest on the series
2000-1 notes on the required dates and all payments of
dividends on the preferred membership interests relating to
the series 2000-1 notes when due,
- the aggregate amount of payments of finance charges on the
leases allocated to the Lease SUBI and collections of the
fleet management receivables allocated to the series 2000-1
notes will be sufficient to pay interest on the series 2000-
<PAGE>
1 notes, dividends accumulated on the preferred membership
interests relating to the series 2000-1 notes and the
portion of the fees payable to the servicer and the
administrator payable out of the collections allocated to
the series 2000-1 notes,
- all lease prepayments are prepayments in full,
- the amortization period of the series 2000-1 notes begins at
the close of business on the Period End Date in ______ 200_,
- depreciation payments on the leases allocated to the Lease
SUBI as of ________, 2000 are made in accordance with the
rates at which the vehicles are then being depreciated under
those leases,
- the closing date is _________, 2000,
- the Adjusted Aggregate Unit Balance as of _________, 2000 is
$______________ and remains constant for the life of the
series 2000-1 notes and the weighted average age of the
leases allocated to the Lease SUBI is 18 months,
- all collections reinvested in additional leases and vehicles
after _________, 2000 are reinvested, on a payment date that
is the 7th day of the calendar month, in open-end leases
under which the vehicles are being depreciated evenly over
57 months, that are assumed to have a current age of 0
months and that otherwise have terms that are substantially
similar to those of the open-end leases that are allocated
to the Lease SUBI as of ________, 2000,
- there is one other series of notes outstanding with a
required asset amount as of ____________, 2000 of
$____________ and the required asset amount of that series
will on all succeeding payment dates equal the current
Adjusted Aggregate Unit Balance less the Required Asset
Amount,
- the amounts on deposit in the reserve account for the series
2000-1 notes and the reserve account for the other series of
notes will equal the amounts required to be on deposit in
those accounts on each payment date,
- the Required Asset Amount is reduced on any payment date by
the principal amounts allocated to the series 2000-1 notes
and
- for purposes of calculating the Required
Overcollateralization Amount and the comparable amount for
the other series of notes, the principal collection
subaccount for the series 2000-1 notes and the comparable
<PAGE>
subaccount of the collection account for the other series of
notes are assumed to have balances of $0.
We cannot predict the actual depreciation rates on the leases
allocated to the Lease SUBI after ________, 2000, the actual prepayment
rate or the actual levels of residual value losses or other losses and
delinquencies on the leases allocated to the Lease SUBI. Because we
prepared the tables based on the assumptions that we listed above, there
will be discrepancies between the actual characteristics of the leases
allocated to the Lease SUBI after _______, 2000 and the assumed
characteristics of these additional leases, as well as other
discrepancies between our assumptions and the actual performance of the
leases allocated to the Lease SUBI. Any discrepancy may increase or
decrease the percentage of the outstanding principal amounts of class A-1
notes and class A-2 notes and the weighted average lives of the class A-1
notes and the class A-2 notes set forth in the tables. In addition,
because the leases allocated to the Lease SUBI may have characteristics
that differ from our assumptions, we may make principal payments on the
series 2000-1 notes earlier or later than set forth in the tables. We
urge you to make your investment decision on a basis that includes your
own determination as to anticipated prepayment rates under a variety of
the assumptions we discuss.
The following tables set forth the percentages of the outstanding
principal amounts of the class A-1 notes and the class A-2 notes that
would be outstanding after each of the dates shown, based on rates equal
to 0%, 50%, 100%, 150% and 200% of our base payment rate assumption. "0%
Prepayment Assumption" assumes no prepayments on a lease allocated to the
Lease SUBI, "50% Prepayment Assumption" assumes that a lease allocated to
the Lease SUBI will prepay at 50% of the base payment rate assumption,
and so forth.
<PAGE>
Percentage of Outstanding Principal Amount of Class A-1 Notes Remaining
and Weighted Average Life of Class A-1 Notes
Payment Date Prepayment Assumptions
------------ ------------------------
0% 50% 100% 150% 200%
---- ---- ---- ---- ----
Weighted Average Life (Years)(1)
(1) The weighted average life of the class A-1 notes is determined by
multiplying the amount of each principal payment by the number of
years from the closing date to the related payment date, adding
the results, and dividing the sum by the initial principal amount
of the class A-1 notes.
<PAGE>
Percentage of Outstanding Principal Amount of the
Class A-2 Notes Remaining
and Weighted Average Life of Class A-2 Notes
Payment Date Prepayment Assumptions
------------ ----------------------
0% 50% 100% 150% 200%
---- ---- ---- ---- ----
Weighted Average Life (Years)(1) . . .
(1) The weighted average life of the class A-2 notes is determined by
multiplying the amount of each principal payment by the number of
years from the closing date to the related payment date, adding the
results and dividing the sum by the initial principal amount of the
class A-2 notes.
<PAGE>
Description of the Series 2000-1 Notes
General
We will issue the series 2000-1 under the Base Indenture and the
indenture supplement relating to the series 2000-1 notes. Following is a
summary of the provisions of the series 2000-1 notes. This summary
describes the material provisions of the series 2000-1 notes. This
summary is qualified in its entirety by reference to the provisions of
the Indenture.
We have previously issued three series of notes, two of which are
still outstanding. We may issue additional series of notes under the
Base Indenture, as supplemented by an indenture supplement, as described
under the caption "The Indenture--Issuance of Additional Series". Each
series of notes is and will be secured by the Lease SUBI Certificate, the
Fleet Receivable SUBI Certificate and our other assets and will represent
the right to receive all Collections allocated to that series in
accordance with the Base Indenture, as supplemented by the applicable
indenture supplement.
The series 2000-1 notes will be
- represented by notes registered in the name of a DTC
nominee,
- available for purchase in minimum denominations and
integral multiples of $1,000 and
- available for purchase in book-entry form only.
Form of Your Notes
Following is a description of the form your series 2000-1 notes
will take. We also describe how your notes will be transferred and how
payments will be made to you.
The information is this section concerning DTC and DTC's book-
entry system has been provided by DTC. We have not independently
verified the accuracy of this information.
DTC has informed us that its nominee will be Cede & Co.
Accordingly, we expect Cede & Co. to be the holder of record of the
series 2000-1 notes. This means that you, as an owner of the series
2000-1 notes, will generally not be entitled to receive a definitive note
representing your interest in the series 2000-1 notes: you will hold your
series 2000-1 notes through a book-entry record maintained by DTC.
References in this prospectus to distributions, reports and notices to
the holders of series 2000-1 notes will be made to DTC or Cede & Co., as
registered holder of the series 2000-1 notes in accordance with DTC's
procedures. References in this prospectus to actions by the holders of
the series 2000-1 notes refer to actions taken by DTC upon instructions
from its participants for distribution to you in accordance with DTC's
procedures.
You may hold the series 2000-1 notes in book-entries through DTC,
in the United States, or Clearstream Banking, societe anonyme, or the
<PAGE>
Euroclear system, in Europe. You may hold your series 2000-1 notes
directly with one of these systems if you are a participant in the system
or indirectly through an organization which is a participant. The series
2000-1 notes will be tradeable as home market instruments in both the
European and U.S. domestic markets. Initial settlement and all secondary
trades of the series 2000-1 notes will settle in same-day funds.
DTC
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants deposit with DTC. DTC also facilitates
the clearance and settlement among its participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic book-entry changes in the accounts of its
participants, eliminating the need for physical movement of certificates.
DTC's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and may include other organizations.
Indirect access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with one of DTC's
participants, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the SEC.
Clearstream Banking
Clearstream Banking was incorporated in 1970 as "Cedel S.A.", a
company with limited liability under Luxembourg law. Cedel S.A.
subsequently changed its name to Cedelbank. On January 10, 2000,
Cedelbank's parent, Cedel International, societe anonyme, merged its
clearing, settlement and custody business with that of Deutsche Borse
Clearing AG. The merger involved the transfer by Cedel International of
substantially all of its assets and liabilities (including its shares in
Clearstream Banking) to a new Luxembourg company, New Cedel
International, societe anonyme, which is 50% owned by Cedel International
and 50% owned by the parent of Deutsche Borse Clearing. Following the
merger, the companies in the group were renamed "Clearstream", New Cedel
International was renamed Clearstream International, societe anonyme, and
Cedelbank was renamed Clearstream Banking, societe anonyme.
Clearstream Banking holds securities for its customers and
facilitates the clearance and settlement of securities transactions
between Clearstream Banking customers through electronic book-entry
changes in accounts of Clearstream Banking customers, eliminating the
need for physical movement of certificates. Transactions may be settled
in Clearstream Banking in any of 36 currencies, including United States
dollars. Clearstream Banking provides to its customers, among other
things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending
<PAGE>
and borrowing. Clearstream Banking deals with domestic securities
markets in several countries. As a professional depository, Clearstream
Banking is subject to regulation and supervision by the Commission for
the Supervision of the Financial Sector. Clearstream Banking customers
are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
underwriters of the series 2000-1 notes. Indirect access to Clearstream
Banking is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship
with a Clearstream Banking customer, either directly or indirectly.
Euroclear
The Euroclear system was created in 1968 to hold securities for
participants in the Euroclear system and to clear and settle transactions
between participants in the Euroclear system through simultaneous
electronic book-entry delivery against payment, 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 several countries
generally similar to the arrangements for cross-market transfers with DTC
described below. The Euroclear system is operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York, under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation. The operator of the Euroclear system conducts all
operations and all Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the operator, not Euroclear Clearance
System. Euroclear Clearance System establishes policy for the Euroclear
system on behalf of the participants in the Euroclear system.
Participants include banks, including central banks, securities brokers
and dealers and other professional financial intermediaries and may
include the underwriters of the series 2000-1 notes. Indirect access to
the Euroclear system is also available to other firms that clear through
or maintain a custodial relationship with a participant in the Euroclear
system, either directly or indirectly.
The operator of the Euroclear system is the Belgian branch of a
New York banking corporation which is a member bank of the Federal
Reserve System. As such, the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission regulate and examine it.
Securities clearance accounts and cash accounts with the operator
of the Euroclear system are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures of
Euroclear and applicable Belgian law. These terms and conditions govern
transfers of securities and cash within the Euroclear system, withdrawal
of securities and cash from the Euroclear system, and receipts of
payments with respect to securities in the Euroclear system. All
securities in the Euroclear system are held on a fungible basis without
<PAGE>
attribution of specific certificates to specific securities clearance
accounts. The operator of the Euroclear system acts under these terms and
conditions only on behalf of participants in the Euroclear system and has
no record of or relationship with persons holding through these
participants.
Book-Entry Registration
Cede & Co., as DTC's nominee, will be the holder of record of the
global notes representing the series 2000-1 notes. Clearstream Banking
and Euroclear will hold omnibus positions on behalf of Clearstream
Banking customers and participants in the Euroclear system, respectively,
through customers' securities accounts in Clearstream Banking's and
Euroclear's names on the books of their respective depositories. These
depositories will hold these positions in customers' securities accounts
in the depositories' names on DTC's books.
Secondary market trading between participating organizations in
DTC will occur in accordance with DTC rules and procedures applicable to
U.S. corporate debt obligations. Secondary market trading between
Clearstream Banking customers and participants in the Euroclear system
will occur 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 cross-market
transfers between persons holding securities directly or indirectly
through DTC in the United States, on the one hand, and directly or
indirectly through Clearstream Banking customers or participants in the
Euroclear system, on the other, will be effected in DTC on a
delivery-against-payment basis in accordance with DTC rules on behalf of
the relevant European international clearing system by its depository.
However, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by
the counterparty in accordance with its rules and procedures and within
its established deadlines, in European time. The relevant European
international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its depository to effect
final settlement on its behalf by delivering or receiving securities in
DTC, and making or receiving payment in accordance with normal procedures
for same-day funds settlement applicable to DTC. Clearstream Banking
customers and participants in the Euroclear system may not deliver
instructions directly to the depositories.
Because of time-zone differences, credits of securities in
Clearstream Banking or the Euroclear system as a result of a transaction
with a participating organization in DTC will be made during the
subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Clearstream Banking customer or participant in the Euroclear
system on that business day. Cash received in Clearstream Banking or the
Euroclear system as a result of sales of securities by or through a
Clearstream Banking customer or a participant in the Euroclear system to
a participating organization in DTC will be received with value on the
<PAGE>
DTC settlement date but will be available in the relevant Clearstream
Banking or Euroclear cash account only as of the business day following
settlement in DTC.
Your purchase of a beneficial interest in the series 2000-1 notes
under the DTC system must be made by or through a DTC participant, which
will receive a credit for the series 2000-1 notes on DTC's records. Your
ownership interest is in turn recorded on the records of the DTC direct
participant or an indirect participant in DTC. You will not receive
written confirmation from DTC of your purchase, but you can expect to
receive written confirmation providing details of the transaction, as
well as periodic statements of your holdings, from the DTC direct or
indirect participant through which you entered into the transaction.
Transfers of ownership interests in the series 2000-1 notes are
accomplished by entries made on the books of DTC direct and indirect
participants acting on behalf of you and other holders of series 2000-1
notes. You will not receive definitive certificates representing your
ownership interest in the series 2000-1 notes, except in the event that
use of the book-entry system for the series 2000-1 notes is discontinued.
To facilitate subsequent transfers, all series 2000-1 notes
deposited by DTC participants with DTC are registered in the name of
DTC's nominee, Cede & Co. The deposit of the series 2000-1 notes with DTC
and their registration in the name of Cede & Co. effects no change in
beneficial ownership. DTC has no knowledge of the actual owners of the
series 2000-1 notes. DTC's records reflect only the identity of DTC
participants to whose accounts such series 2000-1 notes are credited,
which may or may not be the owners of the series 2000-1 notes. DTC
participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to its
participants, by DTC participants to indirect DTC participants, and by
DTC participants and indirect DTC participants to owners of series 2000-1
notes will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect.
Neither DTC nor Cede & Co. will consent or vote with respect to
the series 2000-1 notes. Under its usual procedures, DTC mails an omnibus
proxy to us as soon as possible after the record date, which assigns Cede
& Co.'s consenting or voting rights to those DTC participants to whose
accounts the series 2000-1 notes are credited on the record date,
identified in a listing attached to that proxy.
Principal and interest payments on the series 2000-1 notes will
be made to DTC. DTC's practice is to credit its participants' accounts
on the payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on the payment date. Payments by DTC participants to the owners
of the series 2000-1 notes will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name," and will be
the responsibility of the DTC participant and not of DTC, the indenture
<PAGE>
trustee or us, subject to any statutory or regulatory requirements as may
be in effect. Disbursement of principal and interest to DTC is the
responsibility of the indenture trustee, disbursement of these payments
to the DTC participants will be the responsibility of DTC, and
disbursement of these payments to the owners of the series 2000-1 notes
will be the responsibility of the DTC direct and indirect participants.
Distributions on the series 2000-1 notes held through Clearstream
Banking or the Euroclear system will be credited to the cash accounts of
the Clearstream Banking customers or the participants in the Euroclear
system in accordance with the relevant system's rules and procedures, to
the extent received by its depository. These distributions will be
subject to tax reporting in accordance with relevant United States tax
laws and regulations. Clearstream Banking or the operator of the
Euroclear system, as the case may be, will take any other action
permitted to be taken by a holder of the series 2000-1 notes under the
Transaction Documents on behalf of a Clearstream Banking customer or a
participant in the Euroclear system only in accordance with its relevant
rules and procedures and subject to its depository's ability to effect
such actions on its behalf through DTC.
DTC may discontinue providing its services as securities
depository for the series 2000-1 notes at any time by giving reasonable
notice to the indenture trustee. If this occurs and a successor
securities depository is not obtained, you will receive definitive
certificates representing your series 2000-1 notes. We may decide to
discontinue use of the system of book-entry transfers through DTC, or a
successor securities depository. If we so decide, you will receive
definitive certificates representing your series 2000-1 notes.
Although DTC, Clearstream Banking and the Euroclear system have
agreed to the foregoing procedures in order to facilitate transfers of
securities among DTC participants, Clearstream Banking customers and
participants in the Euroclear system, they are under no obligation to
perform or continue to perform these procedures and may discontinue these
procedures at any time.
Definitive Notes
You will receive definitive certificates representing your series
2000-1 notes only if
- we advise the indenture trustee in writing that DTC
is no longer willing or able to discharge properly
its responsibilities with respect to the series
2000-1 notes, and we are unable to locate a
qualified successor,
- we, at our option, advise the indenture trustee in
writing that we elect to terminate the book-entry
system through DTC, or
<PAGE>
- after the occurrence of an event of default with
respect to the series 2000-1 notes under the
Indenture, owners of series 2000-1 notes
representing a Majority in Interest of each class of
the series 2000-1 notes advise the indenture trustee
and DTC through the DTC participants in writing that
the continuation of a book-entry system through DTC
is no longer in the best interest of the owners of
the series 2000-1 notes.
If one of the events described above occurs, DTC will be required
to notify all of its participants of the availability through DTC of
definitive certificates representing the series 2000-1 notes. When DTC
surrenders the global notes evidencing the series 2000-1 notes and the
indenture trustee receives instructions for registration of the
definitive certificates, we will issue the definitive certificates
representing the series 2000-1 notes. After definitive certificates
representing the series 2000-1 notes are issued, the indenture trustee
will recognize the registered holders of the definitive certificates as
the holders of the series 2000-1 notes under the Indenture.
The indenture trustee will distribute interest and principal
payments on the series 2000-1 notes issued in definitive form on each
payment date directly to the holders in whose names the series 2000-1
notes were registered at the close of business on the related record
date. The indenture trustee will make these distributions by wire
transfer or by check mailed to the address of the holders of the series
2000-1 notes as they appear on the register maintained by the indenture
trustee. In order to receive the final payment of principal of any series
2000-1 notes issued in definitive form, you must surrender your
definitive certificates at the offices of the co-paying agent in
Luxembourg or at the other offices or agencies specified in the notice of
final distribution. For so long as the series 2000-1 notes are listed on
the Luxembourg Stock Exchange and the rules of that exchange so require,
the indenture trustee will be obligated to appoint and maintain a co-
paying agent in Luxembourg or another European City. The indenture
trustee will appoint Chase Manhattan Bank Luxembourg S.A. as its co-
paying agent in Luxembourg. The indenture trustee will provide notice of
the final payment of principal of the series 2000-1 notes to the
registered holders of the series 2000-1 notes mailed not later than the
fifth day of the month of that final payment.
You may transfer or exchange the definitive certificates
representing your series 2000-1 notes at the offices of the transfer
agent and registrar, which initially will be the indenture trustee, or at
the offices of the co-transfer agent and co-registrar in Luxembourg. For
so long as the series 2000-1 notes are listed on the Luxembourg Stock
Exchange and the rules of that exchange so require, the indenture trustee
will be obligated to appoint and maintain a co-transfer agent and co-
registrar in Luxembourg or another European city. The indenture trustee
will appoint Chase Manhattan Bank Luxembourg S.A. as its co-transfer
agent and co-registrar in Luxembourg. No service charge will be imposed
for any registration of transfer or exchange, but the transfer agent and
<PAGE>
registrar may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection with any transfer or
exchange. The transfer agent and registrar will not be required to
register the transfer or exchange of definitive certificates representing
the series 2000-1 notes after the record date before the due date for the
final payment of principal of the series 2000-1 notes.
If you surrender a mutilated note to the transfer agent and
registrar or you deliver to the transfer agent and registrar evidence to
its satisfaction of the destruction, loss or theft of any series 2000-1
note, and you deliver to the transfer agent and registrar and the
indenture trustee such security or indemnity as may be reasonably
required by them to hold each of them harmless, then, in the absence of
notice to us that your series 2000-1 note has been acquired by a
protected purchaser, we will execute, the indenture trustee will
authenticate and the transfer agent and registrar will deliver, in
exchange for or in lieu of your mutilated, destroyed, lost or stolen
series 2000-1 note, a replacement series 2000-1 note of like tenor,
including the same date of issuance, and principal amount, bearing a
number not contemporaneously outstanding. If you deliver evidence of the
destruction, loss or theft of a series 2000-1 note within seven days of
when that note is due and payable, instead of issuing a replacement
series 2000-1 note, we may pay you when that note is due or payable. Upon
the issuance of any replacement series 2000-1 note, we may require the
payment by you of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation to that note and any other
expenses, including the related fees and expenses of the indenture
trustee and the transfer agent and registrar.
Initial Settlement
Custody accounts of investors electing to hold their interests in
the series 2000-1 notes through DTC will be credited with their holdings
against payment in same-day funds on the closing date.
Investors electing to hold their interests in the series 2000-1
notes through accounts with Clearstream Banking or Euroclear 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. Securities will be credited to the securities custody
accounts on the closing date against payment in 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 investors holding series 2000-1 notes through DTC participants
will be settled in same-day funds in accordance with the rules and
procedures that apply to U.S. corporate debt obligations.
<PAGE>
Trading between Clearstream Banking and/or Euroclear
Participants. Secondary market trading between investors holding series
2000-1 notes through Clearstream Banking customers or participants in the
Euroclear system will be settled in the ordinary way using the procedures
applicable to conventional eurobonds in same-day funds (i.e., seven
calendar day settlement).
Trading between DTC Seller and Clearstream Banking or Euroclear
Purchaser. When interests in the series 2000-1 notes are to be
transferred from the account of a DTC participant to the account of a
Clearstream Banking customer or the account of a participant in the
Euroclear system, the purchaser will send instructions to Clearstream
Banking or the Euroclear system through a Clearstream Banking customer or
a participant in the Euroclear system at least one business day prior to
settlement. Clearstream Banking or Euroclear will instruct the
respective depository, as appropriate, to receive the series 2000-1 notes
against payment. Payment will include interest accrued on the series
2000-1 notes from and including the last 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 depository to the DTC
participant's account against delivery of the series 2000-1 notes. After
settlement has been completed, the series 2000-1 notes will be credited
to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Clearstream Banking
customer's or Euroclear participant's account. The credit for the series
2000-1 notes will appear the next day, in European time, and the cash
debit will be back-valued to, and the interest on the series 2000-1 notes
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 Clearstream Banking or
Euroclear cash debit will be valued instead as of the actual settlement
date.
Clearstream Banking customers and participants in the Euroclear
system will need to make available to the respective clearing systems the
funds necessary to process same-day funds settlement. The most direct
means of doing so is to pre-position funds for settlement, either from
cash on hand or existing lines of credit, as they would for any
settlement occurring within Clearstream Banking or the Euroclear system.
Under this approach, they may take on credit exposure to Clearstream
Banking or Euroclear until the global notes are credited to their
accounts one day later.
As an alternative, if Clearstream Banking or Euroclear has
extended a line of credit to them, Clearstream Banking customers or
participants in the Euroclear system may elect not to pre-position funds
and allow that credit line to be drawn upon to finance the settlement.
Under this procedure, Clearstream Banking customers or participants in
Euroclear purchasing series 2000-1 notes would incur overdraft charges
for one day, assuming they cleared the overdraft when the series 2000-1
notes were credited to their accounts. However, interest on the series
2000-1 notes would accrue from the value date. Therefore, in many cases
the investment income on the series 2000-1 notes earned during that
<PAGE>
one-day period may substantially reduce or offset the amount of the
overdraft charges, although this result will depend on each Clearstream
Banking customer's or Euroclear participant's particular cost of funds.
Because the settlement is taking place during New York business
hours, DTC participants may employ their usual procedures for sending
series 2000-1 notes to the respective depository for the benefit of
Clearstream Banking customers or participants in the Euroclear system.
The sale proceeds will be available to the DTC seller on the settlement
date. Thus, to the DTC participants a cross-market transaction will
settle no differently than a trade between two DTC participants.
Trading between Clearstream Banking or Euroclear Seller and DTC
Purchaser. Due to time zone differences in their favor, Clearstream
Banking customers and participants in the Euroclear system may employ
their customary procedures for transactions in which series 2000-1 notes
are to be transferred by the respective clearing system through the
respective depository to a DTC participant. The seller will send
instructions to Clearstream Banking or Euroclear through the respective
depository to a DTC participant. The seller will send instructions to
Clearstream Banking or Euroclear through a Clearstream Banking customer
or a participant in the Euroclear system at least one business day prior
to settlement. In these cases, Clearstream Banking or Euroclear will
instruct the respective depository, as appropriate, to deliver the series
2000-1 notes to the DTC participant's account against payment. Payment
will include interest accrued on the series 2000-1 notes from and
including the last payment date to and excluding the settlement date on
the basis of the actual days elapsed and a 360-day year. The payment will
then be reflected in the account of the Clearstream Banking customer or
participant in the Euroclear system the following day, and receipt of the
cash proceeds in the Clearstream Banking customer'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
Clearstream Banking customer or participant in the Euroclear system 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 complete on the intended value date,
i.e., the trade fails, receipt of the cash proceeds in the Clearstream
Banking customer's or Euroclear participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use Clearstream Banking or the
Euroclear system and that purchase series 2000-1 notes from DTC
participants for delivery to Clearstream Banking customers or
participants in the Euroclear system 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:
- borrowing through Clearstream Banking or Euroclear for one day
until the purchase side of the day trade is reflected in their
<PAGE>
Clearstream Banking or Euroclear accounts in accordance with
the clearing system's customary procedures,
- borrowing the series 2000-1 notes in the U.S. from a DTC
participant no later than one day prior to settlement, which
would give sufficient time to have the series 2000-1 notes be
reflected in their Clearstream Banking or Euroclear account in
order to settle the sale side of the trade or
- 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 Clearstream Banking customer or participant in
the Euroclear system.
Payment of Interest
We will pay interest on the series 2000-1 notes for each interest
period on each payment date to the holders in whose names the series
2000-1 notes are registered as of the last business day of the calendar
month before that payment date. The payment date will be the 7th day of
each month or, if that day is not a business day, on the next business
day, commencing on ___________, 2000.
The class A-1 notes will bear interest at a floating rate
calculated with reference to one-month LIBOR plus 0__% per annum. The
class A-2 notes will bear interest at a floating rate calculated with
reference to one-month LIBOR plus 0.__% per annum. The interest rates
applicable to the series 2000-1 notes will remain in effect during each
interest period. Each interest period will be the period from and
including a payment date to but excluding the following payment date. We
will compute the interest payable on the principal amount of each class
of the series 2000-1 notes on the basis of the actual number of days
during each interest period and a 360-day year. We will pay interest at
the applicable interest rate on any interest that is not paid when due.
The Chase Manhattan Bank, as calculation agent, will determine
the interest rate applicable to each class of the series 2000-1 notes for
each interest period on the interest determination date which is the
second London Business Day prior to the first day of that interest
period. The initial rates on the series 2000-1 notes will be set on
________, 2000, two London Business Days prior to the closing date.
The calculation agent will determine one-month LIBOR according to
the following provisions:
- One-month LIBOR for each interest period will be the rate for
U.S. dollar deposits having a maturity equal to one month that
appears on Telerate Page 3750 at approximately 11:00 a.m.,
London time, on the second London Business Day prior to the
first day of that interest period.
<PAGE>
- If one-month LIBOR does not appear on Telerate Page 3750 or
Telerate Page 3750 is unavailable, the calculation agent will
select four major banks in the London interbank market and
obtain from them the rates at which deposits in U.S. dollars
are being offered by those banks at approximately 11:00 a.m.,
London time, on the second London Business Day prior to the
first day of that interest period to prime banks in the London
interbank market for a period of one month commencing on the
first day of that interest period.
- If at least two of these banks provide a quotation, the
calculation agent will compute one-month LIBOR as the
arithmetic mean, rounded to the nearest one-hundred-thousandth
of one percent, of these quotations.
- If fewer than two of these banks provide a quotation, the
calculation agent will request from three major banks in New
York City at approximately 10:00 a.m., New York City time, on
the second London Business Day prior to the first day of that
interest period quotations for loans in U.S. dollars to
leading European banks for a period of one month commencing on
the first day of that interest period. The calculation agent
will compute one-month LIBOR as the arithmetic mean, rounded
to the nearest one-hundred-thousandth of one percent, of the
quotations provided.
- If none of these banks provide a quotation, one-month LIBOR
for the next interest period will be one-month LIBOR for the
current interest period.
So long as the series 2000-1 notes are listed on the Luxembourg
Stock Exchange, the indenture trustee or the calculation agent will
communicate the following information to that exchange no later than the
first day of each interest period:
- the number of days in that interest period,
- the interest rate applicable to each class of series 2000-1
notes for that interest period,
- the payment date for that interest period and
- the amount of interest payable on each class of series 2000-1
notes on that payment date.
The indenture trustee or the calculation agent will publish that
information in the Luxemburger Wort or any other daily newspaper of
general circulation in Luxembourg as soon as possible after that day.
If on any payment date the amount of funds available to us for
making interest payments on the series 2000-1 notes is less than the
amount of interest payable on the series 2000-1 notes, we will pay to the
holders of each class of the series 2000-1 notes their ratable share,
<PAGE>
based upon the aggregate amount of interest due to that class of series
2000-1 notes, of the aggregate amount available to be distributed in
respect of interest on the series 2000-1 notes.
So long as the series 2000-1 notes are listed on the Luxembourg
Stock Exchange, the indenture trustee or the calculation agent will
notify the Luxembourg Stock Exchange if the amount of interest to be paid
on the series 2000-1 notes on any payment date is less than the amount
payable on that payment date, the amount of the deficit and the amount of
interest that will accrue on the unpaid interest during the next interest
period no later than the business day prior to that payment date.
Payment of Principal
Revolving Period. We will make no payments of principal of the
series 2000-1 notes during a revolving period. The revolving period will
begin on the closing date and will end when the amortization period for
the series 2000-1 notes begins. During the revolving period, all
Collections deposited in the principal collection subaccount for the
series 2000-1 notes will be available to us either to pay the principal
amount of other series of notes that are then required to be paid or, at
our option, to pay the principal amount of other series of notes that may
be paid under the Indenture or to pay for additional leases and vehicles
allocated to the Lease SUBI under the Transfer Agreement.
Amortization Period. We will make payments of principal of the
series 2000-1 notes beginning on the second payment date following the
beginning of the amortization period for the series 2000-1 notes. On
that payment date and each payment date after that payment date, the
indenture trustee will deposit into the distribution account for the
series 2000-1 notes for distribution to the holders of series 2000-1
notes, the lesser of the Principal Payment Amount for that payment date
and the outstanding principal amount of the series 2000-1 notes and will
pay the amount deposited to the holders of the class A-1 notes until the
class A-1 notes are paid in full and then to the holders of the class A-2
notes until the class A-2 notes are paid in full. On any payment date
falling after the occurrence of an amortization event, the indenture
trustee will pay the amount deposited in the distribution account for the
series 2000-1 notes for the payment of principal to the holders of the
series 2000-1 notes on a pro rata basis until the series 2000-1 notes
have been paid in full.
The amortization period will begin on the earlier of
- the close of business on the business day preceding the day an
amortization event occurs and
- the close of business on the Period End Date in ________ 20__
and
will end on the date on which the series 2000-1 notes are paid in full,
all dividends and other amounts owing in respect of the preferred
membership interests relating to the series 2000-1 notes have been paid
<PAGE>
in full and the preferred membership interests relating to the series
2000-1 note have been redeemed in full.
We will pay the principal amount of the class A-1 notes in full
on or prior to the payment date in ______, 200_, the final maturity date
of the class A-1 notes. We will pay the principal amount of the class A-
2 notes in full on or prior to the payment date in _______, 200_, the
final maturity date of the class A-2 notes. If the amounts that we
have available to pay principal on the series 2000-1 notes on the final
maturity date for the class A-1 notes or for the class A-2 notes are
insufficient to pay the class A-1 notes or the class A-2 notes in full,
the indenture trustee will withdraw whatever is on deposit in the reserve
account for the series 2000-1 notes to cover this deficiency. If there
is a deficiency on the final maturity date for the class A-2 notes and
the amount on deposit in the reserve account for the series 2000-1 notes
is not enough to pay the class A-2 notes in full, the indenture trustee
will withdraw whatever is on deposit in the yield reserve account for the
series 2000-1 notes to cover the remaining deficiency.
Amortization Events. The following events will be automatic
amortization events:
- the reserve account for the series 2000-1 notes becomes
subject to an injunction, estoppel or other stay or a lien,
other than certain permitted liens,
- the yield supplement account for the series 2000-1 becomes
subject to an injunction, estoppel or other stay or a lien,
other than certain permitted liens,
- the amount on deposit in the reserve account for the series
2000-1 notes is less than the required reserve account amount
for two or more business days,
- the Required Amount is more than the Series 2000-1 Allocated
Adjusted Aggregate Unit Balance for two or more business days,
- the amount on deposit in the yield supplement account for the
series 2000-1 notes is less than the required yield supplement
account amount for two or more business days,
- the Three Month Average Charge-Off Ratio for any payment date
exceeds ___%,
- the Three Month Average Residual Value Loss Ratio for any
payment date exceeds _____%,
- the Three Month Average Paid-In Advance Loss Ratio for any
payment date exceeds ___%,
- the Three Month Average Delinquency Ratio for any payment date
exceeds ___%,
<PAGE>
- we fail to declare and pay dividends on the preferred
membership interests relating to the series 2000-1 notes on
any payment date in accordance with their terms,
- a Servicer Termination Event occurs,
- a Transfer Termination Event or Receivables Purchase
Termination Event occurs,
- an event of default with respect to the series 2000-1 notes
occurs under the Indenture,
- there is at least $10,000,000 on deposit in the principal
collection subaccount for the series 2000-1 notes on two
consecutive payment dates during the revolving period for the
series 2000-1 notes,
- any of Raven Funding, the origination trust, Avis Group
Holdings or Vehicle Management Services suffers certain
specified bankruptcy or insolvency events, or
- all principal and interest of the class A-1 notes is not paid
in full on the final maturity date of the class A-1 notes or
all principal and interest of the class A-2 notes is not paid
in full on the final maturity date of the class A-2 notes.
The following events will be amortization events only if after
any applicable grace period either the indenture trustee or the holders
of series 2000-1 notes holding a Majority in Interest declare that an
amortization event has occurred:
- we fail to make a payment or deposit when required to under
the Indenture (or within the applicable grace period which
does not exceed two business days),
- we fail to observe or perform in any material respect any of
our covenants or agreements set forth in the Indenture and
that failure continues unremedied for 45 days after written
notice of that failure to us by the indenture trustee or
written notice of that failure to us and the indenture trustee
by the holders of series 2000-1 notes holding more than 50% of
the aggregate principal amount of the series 2000-1 notes,
- we make a representation or warranty in the Indenture or in
any information that we are required to deliver to the
indenture trustee that was incorrect in any material respect
when made or when delivered and that continues to be incorrect
in any material respect for 45 days after written notice of
that breach to us by the indenture trustee or written notice
of that breach to us and the indenture trustee by the holders
of series 2000-1 notes holding more than 50% of the aggregate
principal amount of the series 2000-1 notes,
<PAGE>
- the indenture trustee no longer has a valid and perfected
first priority security interest in the collateral securing
the notes or we or Vehicle Management Services or an
affiliate of Vehicle Management Services makes that assertion,
- there is filed against Avis Group Holdings, Vehicle Management
Services, the origination trust, Raven Funding or us
- a notice of federal tax lien from the IRS,
- a notice of lien from the Pension Benefit Guaranty
Corporation under Section 412(n) of the tax code or Section
302(f) of ERISA for a failure to make a required installment
or other payment to a pension plan to which either of those
sections applies or
- a notice of any other lien that could reasonably be expected
to have a material adverse effect on our business,
operations or financial condition or the business,
operations or financial condition of Avis Group Holdings,
Vehicle Management Services, the origination trust or Raven
Funding
and after 40 days that notice has not been withdrawn or that
lien has not been released or discharged,
- one or more judgments or decrees are entered against us
involving in the aggregate a liability, not paid or fully
covered by insurance, of $100,000 or more and those judgments
or decrees have not been vacated, discharged, stayed or bonded
pending appeal within 30 days from their entry or
- any of the Transaction Documents ceases for any reason to be
in full force and effect other than in accordance with its
terms.
Bank Accounts
The indenture trustee has established and is required to maintain
the following bank accounts, each of which is required to be an Eligible
Deposit Account:
- a collection account for the purpose of holding Collections
and
- a "gain on sale" account for the purpose of holding gains upon
sale or other disposition of vehicles subject to the closed-
end leases allocated to the Lease SUBI.
For administrative purposes, the indenture trustee will create a
collection subaccount for the series 2000-1 notes and three
administrative subaccounts in the collection subaccount for the series
2000-1 notes: the general collection subaccount, the principal
<PAGE>
collection subaccount and the settlement collection subaccount. The
indenture trustee has established and will establish additional
administrative subaccounts out of the collection account for other series
of notes.
On or before the closing date, the indenture trustee will also
establish the following bank accounts for the series 2000-1 notes, each
of which is required to be an Eligible Deposit Account:
- the reserve account,
- the yield supplement account and
- the distribution account.
The reserve account, the yield supplement account and the distribution
account for the series 2000-1 notes and all funds and investments of
funds on deposit in those accounts will be part of the collateral that
secures the series 2000-1 notes (and not the other series of notes).
Investments. The indenture trustee will invest funds on deposit
in our bank accounts in Permitted Investments at our direction.
Investments in the following bank accounts or subaccounts of the
collection account are required to mature or be payable or redeemable on
demand on or prior to the business day before the next payment date:
- the gain on sale account,
- the reserve account for the series 2000-1 notes,
- the yield supplement account for the series 2000-1 notes,
- the general collection subaccount for the series 2000-1 notes
and
- during the amortization period for the series 2000-1 notes,
the principal collection subaccount.
During the revolving period for the series 2000-1 notes, investments in
the principal collection subaccount for the series 2000-1 notes are
required to mature or be payable or redeemable on demand on or before the
next business day.
Any earnings on investments in the collection subaccounts for the
series 2000-1 notes will be deposited into the settlement collection
subaccount for the series 2000-1 notes on each payment date. Any
earnings on investments in the gain on sale account and the reserve
account and the yield supplement account for the series 2000-1 notes will
remain on deposit in those accounts.
Our bank accounts will be under the sole dominion and control of
the indenture trustee for the benefit of the holders of notes and the
<PAGE>
funds and investments on deposit in our accounts will be part of the
collateral securing the notes. The indenture trustee will not be
responsible for the selection of the Permitted Investments.
Gain on Sale Account. On each payment date, the indenture
trustee will withdraw from the settlement collection subaccount for the
series 2000-1 notes and deposit in the gain on sale account an amount
equal to the product of
- the average daily Series 2000-1 Invested Percentage during the
preceding Monthly Period
multiplied by
- the Monthly Residual Value Gain for that Monthly Period.
The Monthly Residual Value Gain for any Monthly Period is generally the
amount by which all amounts received by the servicer during that Monthly
Period in connection with the termination or expiration of closed-end
leases allocated to the Lease SUBI including sales proceeds of the
related vehicles, insurance proceeds and amounts billed the related
lessees in connection with the termination of those leases exceeded the
aggregate Net Book Values of the vehicles subject to closed-end leases
that terminated or expired during that Monthly Period.
Amounts on deposit in the gain on sale account on each payment
date will be available to cover losses on sale of the vehicles subject to
closed-end leases allocated to the Lease SUBI. On the business day
before each payment date, the indenture trustee will withdraw from the
gain on sale account an amount equal to the amount by which
- the aggregate Net Book Values of all vehicles subject to
closed-end leases allocated to the Lease SUBI that terminated
or expired during the preceding Monthly Period
exceeded
- all amounts received by the servicer during that Monthly
Period in connection with the termination or expiration of
closed-end leases allocated to the Lease SUBI including sales
proceeds of the related vehicles, insurance proceeds and
amounts billed the related lessees in connection with the
termination of those leases.
The indenture trustee will deposit into the settlement collection
subaccount for the series 2000-1 notes the average daily Series 2000-1
Invested Percentage during that Monthly Period of the amount withdrawn
from the gain on sale account. The remaining amount of the withdrawal
from the gain on sale account will be deposited into subaccounts of the
collection account for other series of notes then outstanding.
On the business day prior to each payment date, the indenture
trustee will withdraw from the gain on sale account and pay to us any
<PAGE>
amounts on deposit in the gain on sale account in excess of 10% of the
sum of
- the aggregate Lease Balance of the Eligible Leases that are
closed-end leases allocated to the Lease SUBI as of last day
of the Monthly Period before that date
plus
- the Aggregate Residual Value Amount as of that date.
The amount that is required to remain on deposit in the gain on sale
account may increase if we issue a series of notes that requires that
more than 10% of the amount described above remain on deposit in the gain
on sale account.
Allocations of Collections
Collection Account. On each business day on which the servicer
deposits Collections in the collection account, the administrator will
direct the indenture trustee to allocate to the holders of the series
2000-1 notes and deposit into the general collection subaccount for the
series 2000-1 notes the Series 2000-1 Invested Percentage on that
business day of those Collections.
Prior to the occurrence of an amortization event or any event
that may, with the passage of time or giving of notice, become an
amortization event, the administrator may direct the indenture trustee to
release from the general collection subaccount for the series 2000-1
notes and pay to us on any business day after a Period End Date and
before the next payment date, the amount of Collections deposited in the
general collection subaccount for the series 2000-1 notes during the
preceding Monthly Period in excess of the amounts required to be
distributed on that payment date from the settlement collection
subaccount for the series 2000-1 notes (other than any of those amounts
to be distributed to us). For a description of the amounts required to
be distributed from the settlement collection subaccount for the series
2000-1 notes on each payment date, see "--Monthly Distributions".
Settlement Collection Subaccount. On or before each payment
date, the administrator will direct the indenture trustee to allocate to
the holders of series 2000-1 notes and deposit in the settlement
collection subaccount for the series 2000-1 notes the following amounts:
- the average daily Series 2000-1 Invested Percentage during the
preceding Monthly Period of the sum of
- the amount paid by the servicer to purchase leases and the
related vehicles as the result of a breach of its
representations and warranties with respect to those leases
or vehicles on that payment date
plus
<PAGE>
- the amount paid by Raven Funding to repurchase beneficial
interests in leases and the related vehicles as the result
of a breach of its representations and warranties or
covenants with respect to those leases or vehicles on that
payment date,
- the average daily Series 2000-1 Invested Percentage during the
preceding Monthly Period of the amount that the servicer
advances on that payment date in respect of payments on the
leases and the fleet management receivables due but not
received during that Monthly Period,
- the average daily Series 2000-1 Invested Percentage during the
preceding Monthly Period of the amount withdrawn from the gain
on sale account,
- the average daily Series 2000-1 Invested Percentage during the
preceding Monthly Period of all payments made under the
interest rate caps that we are obligated to obtain from time
to time in respect of the fixed rate leases allocated to the
Lease SUBI and
- all payments under the interest rate caps that we will be
obligated to obtain under the indenture supplement relating to
the series 2000-1 notes in respect of the floating rate leases
allocated to the Lease SUBI.
In addition, on each payment date, the administrator will direct the
indenture trustee to withdraw from the general collection subaccount and
allocate to the settlement collection subaccount for the series 2000-1
notes the aggregate Collections deposited in the general collection
subaccount for the series 2000-1 notes during the preceding Monthly
Period less any amounts previously released to us as described above
under "--Collection Account".
We refer to the amounts that we described above that are
deposited into the settlement collection subaccount for the series 2000-1
notes on or before each payment date plus
- any investment income from amounts on deposit in the general
collection subaccount or the principal collection subaccount
for the series 2000-1 notes transferred to the settlement
collection subaccount on that payment date
less
- any amounts previously released to us from the principal
collection subaccount for the series 2000-1 notes as described
above under "--Collection Account" as the total cash available
for a payment date.
<PAGE>
Monthly Distributions
On each payment date, the administrator will direct the indenture
trustee to make the following distributions from the settlement
collection subaccount for the series 2000-1 notes in the following order
of priority to the extent of the total cash available for that payment
date:
- to Raven Funding, the average daily Series 2000-1 Invested
Percentage during the preceding Monthly Period of the amount
of collections on the fleet management receivables received
during that Monthly Period over $80,000,000,
- to the gain on sale account, the average daily Series 2000-1
Invested Percentage during the preceding Monthly Period of any
Monthly Residual Value Gain for that date,
- to the servicer, the average daily Series 2000-1 Invested
Percentage during the preceding Monthly Period of the amount
that the servicer is entitled to receive in reimbursement of
servicer advances on that payment date,
- if Vehicle Management Services is not the servicer, to the
servicer, the portion of the servicing fee payable to the
servicer for the interest period ending on that payment date
allocated to the series 2000-1 notes,
- to the distribution account for the series 2000-1 notes,
accrued and unpaid interest on the series 2000-1 notes,
- if Vehicle Management Services is the servicer, to the
servicer, the portion of the servicing fee payable to the
servicer for the interest period ending on that payment date
allocated to the series 2000-1 notes,
- to the administrator, the portion of the fee payable to the
administrator for the interest period ending on that payment
date allocated to the series 2000-1 notes,
- other than after the maturity of the notes has been
accelerated because of an event of default resulting from a
payment default on a series of notes, to pay accumulated
dividends on that payment date on each series of preferred
membership interests relating to the series 2000-1 notes,
- on any payment date following a Monthly Period in the
revolving period for the series 2000-1 notes, to the principal
collection subaccount for the series 2000-1 notes the amount
by which the Required Amount exceeds the Series 2000-1
Allocated Adjusted Aggregate Unit Balance on that payment
date,
- on the earlier of the second payment date following the Period
End Date in _______ and the first payment date following an
amortization event for the series 2000-1 notes, to the
<PAGE>
distribution account for the series 2000-1 notes, the lesser
of the Principal Payment for that payment date and the
outstanding principal amount of the series 2000-1 notes,
- on and after the payment date on which the series 2000-1 notes
are paid in full, to redeem the preferred membership interests
relating to the series 2000-1 notes, the Principal Payment
Amount for that payment date, provided, that, if the maturity
of all of the notes has been accelerated because of an event
of default resulting from a payment default on a series of
notes, the Principal Payment Amount for that payment date will
be used to make principal and interest payments on other
series of notes,
- to the reserve account for the series 2000-1 notes, the amount
needed to bring the amount on deposit in the reserve account
to the required reserve account amount or, on any payment date
following a Monthly Period in the amortization period for the
series 2000-1 notes, if the Series 2000-1 Allocated Adjusted
Aggregate Unit Balance is less than the Required Amount, the
greater of the amount needed to bring the amount on deposit in
the reserve account to the required reserve account amount and
the amount needed to cause the Series 2000-1 Allocated
Adjusted Aggregate Unit Balance to equal the Required Amount,
- to the yield supplement account for the series 2000-1 notes,
the amount needed to bring the amount on deposit in the yield
supplement account to the required yield supplement account
amount and
- to us, the amount remaining in the settlement collection
subaccount for the series 2000-1 notes.
If the administrator determines that the aggregate amount distributable
from the settlement collection subaccount for the series 2000-1 notes
(excluding the deposits to the reserve account and the yield supplement
account) on any payment date will exceed the total cash available for
that payment date, the administrator will be obligated to instruct the
indenture trustee to withdraw from the reserve account for the series
2000-1 notes and deposit in the settlement collection subaccount for the
series 2000-1 notes the least of
- the amount of the deficiency,
- the product of
- the average daily Series 2000-1 Invested Percentage during
the preceding Monthly Period
multiplied by
- the amount by which
<PAGE>
- the aggregate Lease Balances of all leases allocated to
the Lease SUBI that were considered to be charged-off
leases during that Monthly Period
exceeded
- the aggregate amount of recoveries on leases that were
previously considered to be charged-off leases during
previous Monthly Periods received during that Monthly
Period and
- the amount on deposit in the reserve account and available for
withdrawal.
If the amount to be withdrawn from the reserve account is less than the
amount of the deficiency, the administrator will instruct the indenture
trustee to withdraw the remaining amount of the deficiency from the yield
supplement account and deposit it in the settlement collection subaccount
for the series 2000-1 notes.
If the amount of the deficiency is greater than the amounts to be
withdrawn from the reserve account and the yield supplement account and
there are additional amounts on deposit in the reserve account, the
administrator will instruct the indenture trustee to withdraw the
remaining portion of the deficiency from the reserve account (to the
extent of available funds) and deposit it in the settlement collection
subaccount for the series 2000-1 notes.
Principal Collection Subaccount. During the revolving period for
the series 2000-1 notes, Collections allocated to the principal
collection subaccount for the series 2000-1 notes on any payment date
will be available to us either to pay the principal amount of other
series of notes that are then required to be paid or, at our option, to
pay the principal amount of other series of notes that may be paid under
the Indenture or to pay for additional leases and vehicles allocated to
the Lease SUBI under the Transfer Agreement, in each case, only if, after
giving effect to our use of the funds, the Series 2000-1 Allocated
Adjusted Aggregate Unit Balance would equal or exceed the Required Amount
and no amortization event would result from our use of the funds.
Distribution Account. On each payment date, the indenture
trustee will make the following distributions from amounts on deposit in
the distribution account for the series 2000-1 notes:
- to the holders of the series 2000-1 notes of each class,
accrued and unpaid interest due on that payment date and any
past due interest, and, if the funds available to pay interest
on the series 2000-1 notes are insufficient, ratably to each
holder of series 2000-1 notes in the proportion that the
amounts due to that holder bears to the amounts due to all of
the holders and
<PAGE>
- during the amortization period for the series 2000-1 notes, to
the holders of the class A-1 notes all amounts deposited in
the distribution account on account of principal until the
class A-1 notes have been paid in full and then to the holders
of the class A-2 notes all amounts deposited in the
distribution account on account of principal until the class
A-2 notes have been paid in full; provided, that, after the
occurrence of an amortization event, the indenture trustee
will distribute all amounts deposited in the distribution
account on account of principal ratably to each holder of the
series 2000-1 notes until the series 2000-1 notes have been
paid in full.
Distributions will be made to each holder of record of each class of the
series 2000-1 notes as determined on the record date preceding such
payment date, based on such holder's ratable share of the aggregate
principal amount of the series 2000-1 notes of that class. The record
date will be the last business day of the calendar month before the
payment date.
Optional Prepayment
We will have the option to prepay the class A-2 notes, in whole
but not in part, on any payment date if the outstanding principal amount
of the class A-2 notes is less than or equal to 10% of the initial
principal amount of the series 2000-1 notes. If we exercise this option,
we will repay the principal amount of the class A-2 notes in full and pay
all accrued and unpaid interest on the class A-2 notes on that payment
date. In order for us to prepay the class A-2 notes, we must give the
indenture trustee thirty days' prior written notice of the payment date
on which we intend to exercise our option and deposit sufficient funds in
the distribution account for the series 2000-1 notes on or prior to that
payment date.
If we exercise our option to prepay the class A-2 notes, you will
be required to surrender your class A-2 notes in order to receive the
final payment of principal of your notes.
Final Payment
The series 2000-1 notes will be retired on the date on which the
final payment of principal is made to the holders of the series 2000-1
notes, whether as a result of optional prepayment or otherwise. Unless
either class of the series 2000-1 notes is paid in full earlier, the
Indenture provides that the final distribution of principal and interest
on that class of notes will be made on the final maturity date for that
class. If either class of the series 2000-1 notes is not paid in full on
its final maturity date both an amortization event and an event of
default under the Indenture will occur.
Any money deposited with the indenture trustee or any paying
agent, or then held by us, in trust for the payment of the principal of
or interest on any series 2000-1 note and remaining unclaimed for three
<PAGE>
years after the principal or interest has become due and payable will be
paid to us at our request, or, if then held by us will be discharged from
the trust. Once those funds are released to us, the holder of the series
2000-1 note will be our unsecured general creditor and may look only to
us for payment. The indenture trustee or any paying agent, before being
required to release funds to us, may at our expense cause to be published
once, in a newspaper published in the English language, customarily
published on each business day and of general circulation in New York,
New York and in Luxembourg, notice that the money remains unclaimed and
that, after a specified date (not less than 30 days from the publication
date), any unclaimed balance of money will be repaid to us.
Governing Law
The series 2000-1 notes and the Transaction Documents, other
than the agreement creating the origination trust, Raven Funding's
limited liability company agreement and our LLC Agreement, are governed
by the laws of the State of New York. The agreement creating the
origination trust, Raven Funding's limited liability company agreement
and our LLC Agreement are governed by the laws of the State of Delaware.
The Indenture
Following is a summary of the provisions of the Indenture. This
summary describes the material provisions of the Indenture. This summary
is qualified in its entirety by reference to the provisions of the
Indenture.
The Collateral
The notes, including the series 2000-1 notes, will be secured by
the grant of a first-priority perfected security interest in all of our
assets. For a description of our assets, see "Security for the Series
2000-1 Notes".
Issuance of Additional Series
We may issue additional series of notes without the consent of
the holders of the notes then outstanding. We may not change the terms
of your notes by issuing an additional series of notes. It is a
condition to our issuance of any series of notes that each rating agency
that has been requested by us to issue a rating on any outstanding series
of notes or any outstanding series of preferred membership interests has
advised the indenture trustee that the issuance of that additional series
of notes will not result in the reduction or withdrawal of the then
current rating of that outstanding series of notes or that outstanding
series of preferred membership interests. We cannot assure you that the
terms of any additional series of notes that we issue will not impact the
timing or amount of payments or distributions received by you or any
other holder of an outstanding series of notes. Among other things,
additional series of notes may accrue interest at different rates, may
have a different interest rate basis, may have different final maturities
<PAGE>
and may benefit from different amortization events than your series of
notes.
On the closing date, the series 1999-2 notes and the series 1999-
3 notes will be outstanding. For information about the terms of the
series 1999-2 notes and the series 1999-3 notes, see "Greyhound Funding
--Capitalization--Other Series of Notes and Senior Preferred Membership
Interests".
Representations and Warranties
We make the following representations and warranties, among
others, under the Base Indenture, when we issue a series of notes,
including the series 2000-1 notes:
- we are a limited liability company duly formed and
validly existing and in good standing in all
relevant jurisdictions,
- we have the authority to consummate the transactions
contemplated by the Base Indenture, the indenture
supplement relating to that series of notes and the
other Transaction Documents,
- the Base Indenture and the indenture supplement
relating to that series of notes and each other
Transaction Document constitute our legal, valid and
binding obligations,
- we are not an "investment company" or under the
"control" of an "investment company" as such terms
are defined in the Investment Company Act of 1940,
as amended,
- we will not use the proceeds from the sale of the
notes to purchase or carry "margin stock", as
defined or used in Regulation T, U or X of the Board
of Governors of the Federal Reserve System, or to
extend credit to others for that purpose,
- we are not insolvent or subject to any voluntary or
involuntary proceeding with respect to any
bankruptcy or insolvency law,
- the Lease SUBI Certificate and the Fleet Receivable
SUBI Certificate have been duly registered in our
name and delivered to the indenture trustee and all
action necessary, including the filing of financing
statements, to perfect the indenture trustee's
security interest in our assets has been duly and
effectively taken,
- no financing statement or equivalent lien instrument
has been filed or is of record listing us as debtor,
<PAGE>
covering all or any part of our assets except in
favor of the indenture trustee on behalf of the
holders of notes in connection with the Indenture,
- the Indenture constitutes a valid and continuing
lien on our assets in favor of the indenture trustee
prior to all other liens, except as permitted by the
Indenture and
- each of the Origination Trust Documents and the
Transfer Agreement are in full force and effect and
there are no outstanding events of default under
those agreements nor any events which with the
giving of notice, the passage of time or both, would
constitute an event of default.
Certain Covenants
We have agreed to the following covenants, among others, in the
Base Indenture:
- we may not create, incur, assume or permit any lien on any of
our assets other than the liens created or permitted under the
Base Indenture,
- we may not create, assume, incur, suffer to exist or
otherwise become or remain liable in respect of any
indebtedness, other than the notes and other
indebtedness permitted under the Transaction
Documents,
- we may not merge with or into any other entity,
- we may not sell, lease, transfer, liquidate or
otherwise dispose of any of our assets, except as
permitted by the Transaction Documents unless
directed to do so by the indenture trustee,
- we may not acquire, by long-term or operating lease
or otherwise, any assets except as permitted by the
Transaction Documents,
- we may not declare any dividends on any of our
preferred membership interests or make any purchase,
redemption or other acquisition of our preferred
membership interests other than in accordance with
the Transaction Documents,
- we may not make, incur or suffer to exist any loan,
advance, extension of credit or other investment in
any other entity other than as permitted by the
Transaction Documents,
<PAGE>
- we may not engage in any business or enterprise or
enter into any transaction other than the purchase
and funding of the Lease SUBI Certificate and the
Fleet Receivable SUBI Certificate, the incurrence
and payment of our ordinary course operating
expenses, the issuing and selling of the notes, the
issuing and selling of our preferred membership
interests and other related activities,
- without the prior written consent of the indenture
trustee or the holders of a Majority in Interest of
each series of notes, we will not amend, modify,
waive, supplement, terminate, surrender, or agree to
any amendment, modification, waiver, supplement,
termination, waiver or surrender of the terms of any
of our assets, including the Transaction Documents,
or waive timely performance or observance by Raven
Funding under the Transfer Agreement or of the
origination trust, Vehicle Management Services or
the servicer under the Origination Trust Documents,
or
- upon the occurrence of a Servicer Termination Event,
we will not terminate the servicer and appoint a
successor servicer without the prior written consent
of the indenture trustee or the holders of a
Majority in Interest of each series of notes.
Events of Default
The events of default with respect to each series of notes under
the Base Indenture include any of the following events:
- our failure to pay interest on any note of any series when due
and the continuation of that failure for five business days,
- our failure to pay the principal of any note of any series
when due,
- our failure to observe or perform any of our covenants or
agreements in the Indenture which default materially and
adversely affects the rights of the holders of that series of
notes and which default continues or is not be cured for a
period of 30 days (or for such longer period, not in excess of
60 days, as may be reasonably necessary to remedy the default
subject to the satisfaction of certain conditions) after we
have received written notice of that failure from the
indenture trustee or we and the indenture trustee have
received written notice of that failure from holders of that
series of notes holding notes evidencing at least 25% of the
aggregate principal amount of those notes,
<PAGE>
- our receipt of a final determination that we will be treated
as an association taxable as a corporation for federal income
tax purposes,
- the SEC or other regulatory body having jurisdiction reaches a
final determination that we are an "investment company" within
the meaning of the Investment Company Act of 1940, as amended,
or
- certain bankruptcy or insolvency events occur with respect to
us.
If an event of default arising from our bankruptcy or insolvency
occurs, the unpaid principal amount of all series of notes, together with
accrued and unpaid interest, and all other amounts due to the holders of
notes under the Indenture, will immediately become due and payable.
If an event of default arising from a covenant default occurs
with respect to a series of notes, the indenture trustee or the holders
of a Majority in Interest of that series of notes may declare the notes
of that series to be immediately due and payable.
If any other event of default occurs, the indenture trustee or
the Majority in Interest of any series of notes may declare that series
of notes to be immediately due and payable.
At any time after the acceleration of the maturity of a series of
notes but before a judgment or decree for payment of the money due has
been obtained by the indenture trustee, the holders of a Majority in
Interest of that series of notes may rescind and annul the acceleration
and its consequences.
Rights Upon An Event of Default
If the maturity of a series of notes has been accelerated and an
event of default with respect to that series has occurred and is
continuing, the indenture trustee may institute proceedings to collect
amounts due in respect of that series of notes.
If the maturity of all series of notes has been accelerated and
an event of default with respect to all series of notes has occurred and
is continuing, the indenture trustee may
- institute proceedings to foreclose on our assets,
- exercise remedies as a secured party or
- if an event of default arising from a payment default has
occurred and is continuing, direct us to sell all or a
portion of our assets at one or more public or private sales
called and conducted in any manner permitted by law.
However, the indenture trustee may not sell our assets unless
<PAGE>
- all of the holders of the notes consent to the sale,
- the proceeds of the sale distributable to the
holders of notes will be sufficient to discharge in
full all amounts then due and unpaid on the notes
for principal and interest or
- the indenture trustee determines that our assets
will not continue to provide sufficient funds for
the payment of principal of and interest on the
notes as they would have become due if the notes had
not been declared due and payable and a Majority in
Interest of each series of notes consents to the
sale.
If
- an event of default has occurred and is continuing with
respect to any series of notes, the indenture trustee, at the
direction of the holders of a Majority in Interest of that
series of notes, or
- if an event of default has occurred and is continuing with
respect to more than one series of notes, the indenture
trustee, at the direction of the holders of a Majority in
Interest of each series of notes with respect to which an
event of default shall have occurred,
may exercise all of our rights, remedies, powers, privileges and claims
against Raven Funding, the origination trust and the servicer under the
Transfer Agreement and the Origination Trust Documents, including
- our right or power to take any action to compel or secure
performance or observance by Raven Funding, the origination
trust or the servicer of their respective obligations to us
and
- our right to give any consent, request, notice, direction,
approval, extension or waiver under the Transfer Agreement and
the Origination Trust Documents and
our rights to take those actions will be suspended. If an event of
default has occurred and is continuing with respect to less than all
series of notes, the indenture trustee may not take any action under the
Indenture that is detrimental to the rights of the holders of the notes
with respect to which no event of default shall have occurred.
No holder of notes will have any right to institute a proceeding
with respect to the Indenture unless
- that holder has previously given written notice to
the indenture trustee of a continuing event of
default with respect to its series of notes,
<PAGE>
- the holders of not less than 25% of each class of
notes of that series have made a written request to
the indenture trustee to institute that proceeding
in its own name as indenture trustee,
- that holder or holders of notes have offered to the
indenture trustee indemnity reasonably satisfactory
to it against the costs, expenses and liabilities to
be incurred in complying with that request,
- the indenture trustee for 60 days after receipt of
that notice, request and offer of indemnity has
failed to institute that proceeding and
- no direction inconsistent with that written request
has been given to the indenture trustee during that
60-day period by the holders of a Majority in
Interest of each series of notes.
The holders of a Majority in Interest of each series of notes
will have the right to direct the time, method and place of conducting a
proceeding for a remedy available to the indenture trustee.
Prior to the declaration of the acceleration of the maturity of
any series of notes, the holders of a Majority in Interest of that series
may waive any past default or event of default and its consequences
except a default in payment of principal of or interest on any of the
notes or a failure to satisfy a covenant or provision which cannot be
modified or amended without the unanimous consent of the holders of the
notes. In the case of a waiver, we, the indenture trustee and the
holders of the notes will be restored to our and their former positions
and rights under the Indenture.
After the maturity of the notes has been accelerated because of
an event of default resulting from a payment default, Collections
allocated to a particular series of notes, after that series has been
paid in full, will not be applied to redeem the preferred membership
interests relating to that series of notes but will be available to pay
principal of and interest on any other series of notes then outstanding.
Reporting Requirements
On each payment date, the indenture trustee will forward to each
holder of series 2000-1 notes a monthly settlement statement prepared by
the administrator setting forth the following information for the series
2000-1 notes:
- the average Series 2000-1 Invested Percentage during
the preceding Monthly Period,
- the total amount distributed to the holders of the
series 2000-1 notes on that payment date,
<PAGE>
- the amount of the distribution allocable to
principal of each class of the series 2000-1 notes,
- the amount of the distribution allocable to interest
on each class of the series 2000-1 notes,
- the Principal Payment Amount for that payment date,
- the amount of any withdrawal from the reserve
account or yield supplement account for the series
2000-1 notes anticipated to be made on that payment
date,
- the Required Enhancement Amount, the amount on
deposit in the reserve account for the series 2000-1
notes, the amount on deposit in the principal
collection subaccount for the series 2000-1 notes
and the Series 2000-1 Allocated Adjusted Aggregate
Unit Balance, in each case, as of the close of
business on that payment date, after giving effect
to any withdrawals, deposits or payments on that
payment date,
- whether the Required Asset Amount is more than the Series
2000-1 Allocated Adjusted Aggregate Unit Balance or the amount
on deposit in the reserve account for the series 2000-1 notes
is less than the required reserve account amount as of that
date,
- the amount that is required to be deposit in the
yield supplement account for the series 2000-1
notes, the Yield Shortfall Amount, the Fleet
Receivable Amount and the amount on deposit in the
yield supplement account, in each case, as of the
close of business on that payment date, after giving
effect to any withdrawals or payments on that
payment date, and
- whether the amount on deposit in the yield supplement account
for the series 2000-1 notes is less than the required yield
supplement account amount as of that date.
The monthly settlement statement will tell you the total amount
distributed to the holders of each class of the series 2000-1 notes, the
amount of that distribution allocable to principal and the amount of that
distribution allocable to interest expressed as a dollar amount per
$1,000 of the initial principal amount of the class A-1 notes and the
class A-2 notes and as a percentage of the outstanding principal amount
of the class A-1 notes and the class A-2 notes as of that date.
In addition, on or before January 31 of each year, beginning with
the year 2001, the indenture trustee is required to mail to each person
who at any time during the prior calendar year was a holder of series
<PAGE>
2000-1 notes, a statement containing the information necessary to permit
the holder to prepare its federal income tax returns.
For so long as any class of the series 2000-1 notes is listed on
the Luxembourg Stock Exchange and for so long as the rules of that
exchange so require, any notices to the holders of series 2000-1 notes
will also be given by publication in a newspaper of wide circulation in
Luxembourg.
Amendment
Without Noteholder Consent. We and the indenture trustee may
enter into one or more supplements to the Base Indenture or any indenture
supplement, without the consent of any holder of notes but with the
written confirmation by the applicable rating agencies that a downgrade
of any outstanding series of notes or any outstanding series of preferred
membership interests will not result from that amendment, to
- create a new series of notes,
- add to our covenants for the benefit of the holders
of all or any series of notes or to surrender any
right or power conferred upon us in the Base
Indenture; provided, that we will not surrender any
right or power we have under the Transaction
Documents,
- mortgage, pledge, convey, assign and transfer to the
indenture trustee any property or assets as security
for the notes or correct or amplify any previously
made description of any such property or asset,
- cure any mistake, ambiguity, defect, or
inconsistency or correct or supplement any provision
in the Base Indenture or in any indenture supplement
or in any notes issued under any indenture
supplement,
- provide for the acceptance of appointment under the
Base Indenture by a successor indenture trustee with
respect to the notes of one or more series and add
to or change any of the provisions of the Base
Indenture as necessary to facilitate the
administration of the trusts contained in the Base
Indenture by more than one indenture trustee,
- correct or supplement any provision in the Base
Indenture which may be inconsistent with any other
provision or make any other provisions with respect
to issues or questions arising under the Base
Indenture or
<PAGE>
- if the Base Indenture is required to be qualified
under the Trust Indenture Act of 1939, modify,
eliminate or add to the provisions of the Base
Indenture to such extent as shall be necessary to
effect the qualification of the Base Indenture under
that act;
provided, that, as evidenced by an opinion of counsel, those actions will
not adversely affect in any material respect the interests of the holder
of any notes.
With Noteholder Consent. We and the indenture trustee may enter
into one or more supplements to the Base Indenture or any indenture
supplement and we and the indenture trustee may amend, modify or waive or
consent to the amendment, modification or waiver of any provision of any
Transaction Document with the consent of the holders of a Majority in
Interest of each series of notes or, if the amendment, modification or
waiver affects only the holders of one or more series of notes, the
Majority in Interest of each affected series of notes (as substantiated
by an opinion of counsel); provided, that
- no consent of noteholders will be required to any amendment,
modification or waiver of or to any Transaction Document if
the amendment, modification or waiver does not adversely
affect in any material respect the holders of any series of
notes (as substantiated by an opinion of counsel) and
- no consent of noteholders will be required to any amendment or
modification of our LLC Agreement relating to the issuance of
any series of junior preferred membership interests so long as
each rating agency that has been requested by us to issue a
rating applicable to any outstanding series of notes or any
outstanding series of preferred membership interests has
advised the indenture trustee that any such amendment or
modification of our LLC Agreement will not result in the
reduction or withdrawal of the then current rating of that
outstanding series of notes or that outstanding series of
preferred membership interests.
The following amendments, modifications and waivers will require
the consent of more than a Majority in Interest of the affected series of
notes:
- any modification of any requirement in the Indenture
that any particular action be taken by holders with
a certain percentage in principal amount of the
notes or any change in the related definitions will
require the consent of each affected holder of notes
and
- any amendment, waiver or other modification that
would
<PAGE>
- extend the due date for, or reduce the amount of any
scheduled repayment or prepayment of principal of or
interest on any note or reduce the principal amount of or
rate of interest on any note, will require the consent of
each affected holder of notes,
- approve the assignment or transfer by us of any of our
rights or obligations under the Indenture or under any other
Transaction Document unless permitted under the express
terms of that Transaction Document will require the consent
of each affected holder of notes,
- release any obligor under any Transaction Document to which
we are a party except under the express terms of that
Transaction Document will require the consent of each
affected holder of notes,
- affect adversely the interests, rights or obligations of any
holder of notes individually in comparison to other holders
will require the consent of that holder and
- amend or otherwise modify any amortization event will
require the consent of each affected holder of notes.
Satisfaction and Discharge of Indenture
The Indenture will be discharged when
- all outstanding notes have been delivered to the indenture
trustee for cancellation and we have paid all sums due under
the Indenture or
- with certain limitations, upon
- the irrevocable deposit with the indenture trustee of funds
sufficient for the payment in full when due of all principal
and interest on the notes to maturity or prepayment, as the
case may be, and to pay all other sums payable by us under
the Indenture,
- the receipt by the indenture trustee of the certificate from
one of our officers to the effect that all the conditions
precedent to the satisfaction and discharge of the Indenture
have occurred and
- confirmation from each rating agency that has been requested
by us to issue a rating applicable to any outstanding
series of notes or any outstanding series of preferred
membership interests that that deposit will not result in
the reduction or withdrawal of the current rating of that
<PAGE>
outstanding series of notes or that outstanding series of
preferred membership interests.
The Indenture Trustee
The Chase Manhattan Bank is the indenture trustee under the
Indenture. Subject to the terms of the Indenture, and except during a
continuing amortization event or event of default under the Indenture,
the indenture trustee will perform only those duties specifically set
forth in the Indenture and disclaims all other duties, implied covenants
or obligations. After an amortization event or event of default under
the Indenture occurs, the indenture trustee will be obligated to exercise
the rights and powers vested in it by the Indenture and to use the same
degree of care and skill in their exercise as a prudent man would
exercise in the conduct of his own affairs. Under no circumstances,
however, will the indenture trustee be required to expend or risk its own
funds or otherwise incur financial liability if there is reasonable
grounds for believing that the repayment of those funds or adequate
indemnity against that risk or liability is not reasonably assured to it
under the Indenture.
For purposes of meeting the legal requirements of certain local
jurisdictions, the indenture trustee may appoint a co-trustee or separate
trustees of all or a part of our assets. A co-trustee or separate
trustee is not subject to the eligibility requirements which must be met
by the indenture trustee. If a co-trustee or a separate trustee is
appointed, all rights, powers, duties and obligations will be conferred
or imposed upon the indenture trustee and the separate trustee or
co-trustee jointly, or, in any jurisdiction in which the indenture
trustee is incompetent or unqualified to perform certain acts, singly
upon the separate trustee or co-trustee, which will exercise those
rights, powers, duties and obligations solely at the direction of the
indenture trustee.
Removal. The holders of a Majority in Interest of each series of
notes may remove the indenture trustee and appoint a successor indenture
trustee. We will be obligated to remove the indenture trustee if
- the indenture trustee ceases to meet the eligibility
criteria under the Indenture,
- the indenture trustee is adjudged bankrupt or
insolvent,
- a receiver of the indenture trustee or of its
property is appointed or any public officer takes
charge or control of the indenture trustee or of its
property or affairs or
- the indenture trustee becomes incapable of acting.
We will appoint a successor indenture trustee. Any resignation or
removal of the indenture trustee and appointment of a successor indenture
<PAGE>
trustee will not become effective until the acceptance of the appointment
by the successor.
Security for the Series 2000-1 Notes
Our Assets
We will secure our obligations under the notes, including the
series 2000-1 notes, by granting a security interest in all of our
assets, including among other things, the following:
- the Lease SUBI Certificate and the Fleet Receivable SUBI
Certificate and the payments due to us under those
certificates and related rights under the Origination
Trust Documents, including our rights to enforce the
Origination Trust Documents,
- all master lease agreements, together with the related
leases and vehicles, and all consumer leases, together
with the related vehicles, allocated to the Lease SUBI,
- our rights under the Transfer Agreement and the
Administration Agreement, including our rights to enforce
these agreements,
- the interest rate caps that we are obligated to obtain
from time to time in respect of the fixed rate leases
allocated to the Lease SUBI,
- funds and investments on deposit from time to time in the
collection account and the gain on sale account,
- all additional property that may from time to time, under
the terms of any indenture supplement or otherwise, be
subjected to the grant and pledge by us, including any
interest rate swap contracts, interest rate cap
agreements or similar contracts entered into by, or
assigned to, us in connection with the issuance of a
series of notes, as specified in the related indenture
supplement, and
- all proceeds of the foregoing.
In addition, we will secure our obligations under the series
2000-1 notes and the indenture supplement relating to the series 2000-1
notes by granting a security interest in the following:
- the interest rate caps that we will be obligated to obtain
under the indenture supplement relating to the series 2000-1
notes in respect of the floating rate leases allocated to the
Lease SUBI, and
<PAGE>
- funds on deposit from time to time in the reserve account, the
yield supplement account and the distribution account for the
series 2000-1 notes.
The series 2000-1 notes will be secured by substantially all of
our assets, other than any of our assets pledged to secure only another
series of notes.
We have agreed, promptly following a request from the indenture
trustee and at the administrator's expense, to take all such lawful
action as the indenture trustee may request to compel or secure the
performance and observance by Raven Funding, the origination trust and
the servicer, as applicable, of each of their respective obligations to
us under or in connection with the Transfer Agreement and the Origination
Trust Documents, respectively, in accordance with their respective terms,
and to exercise any and all rights, remedies, powers and privileges
lawfully available to us in connection with the Transaction Documents to
the extent and in the manner directed by the indenture trustee, including
the transmission of notices of default on the part of Raven Funding, the
origination trust or the servicer under those agreements and the
institution of legal or administrative actions or proceedings to compel
or secure performance by Raven Funding, the origination trust or the
servicer of their respective obligations under those agreements.
Transfer Agreement
Following is a summary of the provisions of the Transfer
Agreement. This summary describes the material provisions of the
Transfer Agreement. This summary is qualified in its entirety by
reference to the provisions of the Transfer Agreement.
Initial Closing Date. On June 30, 1999, Raven Funding
contributed the Lease SUBI Certificate and the Fleet Receivable SUBI
Certificate to us.
Additional Closing Dates. Under the terms and conditions of the
Transfer Agreement, we have agreed to acquire, and Raven Funding has
agreed to transfer to us, on each date following June 30, 1999 on which
additional leases and vehicles are allocated to the Lease SUBI, the
beneficial interest in those additional leases and vehicles. In
consideration of that transfer, we have agreed to pay to Raven Funding
all amounts available for that purpose under the Indenture on the date of
each transfer. The conditions to each transfer include, among others,
that no Transfer Termination Event shall have occurred and be continuing.
Transfer Termination Events. If a Transfer Termination Event
occurs, Raven Funding will stop allocating additional leases and vehicles
to the Lease SUBI and stop transferring them to us under the Transfer
Agreement. The occurrence of certain bankruptcy or insolvency events with
respect to Raven Funding, the origination trust, Avis Group Holdings or
Vehicle Management Services will automatically be a Transfer Termination
Event.
<PAGE>
The events listed below will be Transfer Termination Events only
if after any applicable grace period we declare that a Transfer
Termination Event has occurred. We may declare that a Transfer
Termination Event has occurred only with the consent of the indenture
trustee and the holders of a Majority in Interest of each outstanding
series of notes.
The nonautomatic Transfer Termination Events are:
- Raven Funding's failure to observe or perform in any material
respect any of its covenants or agreements in the Transfer
Agreement and that failure continues unremedied for 30 days
after we or the indenture trustee has given written notice to
Raven Funding specifying the default and requiring it to be
remedied,
- Raven Funding makes a representation or warranty in the
Transfer Agreement that was incorrect in any material respect
when made and continues to be incorrect in any material
respect for 30 days after we or the indenture trustee has
given Raven Funding written notice of the breach,
- we cease having a valid and perfected first priority security
interest in the assets transferred to us under the Transfer
Agreement or any of Vehicle Management Services, Raven Funding
or any affiliate of Vehicle Management Services or Raven
Funding makes that assertion,
- there is filed against Avis Group Holdings, Vehicle Management
Services, the origination trust or Raven Funding
- a notice of federal tax lien from the IRS,
- a notice of lien from the Pension Benefit
Guaranty Corporation under Section 412(n)
of the tax code or Section 302(f) of ERISA
for a failure to make a required
installment or other payment to a pension
plan to which either of those sections
applies or
- a notice of any other lien that could
reasonably be expected to have a material
adverse effect on the business, operations
or financial condition of Avis Group
Holdings, Vehicle Management Services, the
origination trust or Raven Funding
and after 40 days that notice has not been withdrawn or that
lien has not been released or discharged,
- one or more judgments or decrees are entered against Raven
Funding involving in the aggregate a liability, not paid or
<PAGE>
fully covered by insurance, of $100,000 or more and those
judgments or decrees have not been vacated, discharged, stayed
or bonded pending appeal within 30 days from their entry,
- the Transfer Agreement or any other Transaction Document
ceases for any reason to be in full force and effect other
than in accordance with its terms,
- an amortization event occurs and continues with respect to
each series of notes or
- a Receivable Purchase Termination Event occurs and continues.
Representations and Warranties. Raven Funding makes certain
representations and warranties to us under the Transfer Agreement as of
the date of each transfer of assets under the Transfer Agreement. Those
representations and warranties include, among other things, that:
- none of the assets transferred to us on that date
has been sold, assigned or pledged by it to any
other person,
- immediately prior to the transfer, Raven Funding had
good title to those assets free and clear of all
liens,
- once transferred, we will have good title to those
assets, free and clear of all liens and
- the transfer of those assets to us has been
perfected under the Uniform Commercial Code of the
State of New York.
In addition, Raven Funding will make representations and warranties to us
under the Transfer Agreement as of the date of each transfer of assets
regarding the origination trust, including, among other things, that:
- the origination trust has been duly formed and is
validly existing,
- the Origination Trust Documents have been duly
authorized, executed and delivered by the
origination trust, do not conflict with applicable
law and are enforceable, subject to customary
exceptions and
- the Lease SUBI Certificate and the Fleet Receivable
SUBI Certificate have been duly executed and
delivered by the Wilmington Trust Company in
accordance with the agreement creating the
origination trust and have been duly issued in
accordance with, and are entitled to the benefits
afforded by, that agreement.
<PAGE>
Covenants. Raven Funding agreed to certain covenants in the
Transfer Agreement, including, among other things, that Raven Funding may
not
- create, incur, assume or permit any lien on any of
its assets, other than certain permitted liens,
- create, assume, incur, suffer to exist or otherwise
become or remain liable in respect of any
indebtedness,
- merge with or into any other person,
- sell, lease, transfer, liquidate or otherwise
dispose of any assets, except as permitted by the
Transaction Documents,
- acquire, by long-term or operating lease or
otherwise, any assets except as permitted by the
Transaction Documents,
- declare or pay any distributions on any of its
limited liability company interests or make any
purchase, redemption or other acquisition of its
limited liability company interest other than in
accordance with the Delaware Limited Liability
Company Act,
- make, incur or suffer to exist any loan, advance,
extension of credit or other investment in any other
person or entity other than as permitted by the
Transaction Documents or
- engage in any business or enterprise or enter into
any transaction other than those contemplated by the
Transaction Documents and other activities related
to or incidental to any of the foregoing.
Repurchase Obligation. If Raven Funding breaches any of its
representations or warranties relating to the assets transferred to us or
breaches its covenant not to create or incur liens on any assets it
transfers to us and that breach has a material adverse effect on our
interest in those assets, Raven Funding is obligated to repurchase those
assets from us as of the last day of the Monthly Period during which
Raven Funding discovered or received notice of that breach. Raven
Funding will make a repurchase of assets by delivering to us for deposit
in the collection account an amount equal to
- in the case of a repurchase of a master lease agreement
allocated to the Lease SUBI, the aggregate Lease Balance of
all leases under that master lease agreement as of that day
plus, in the case of a closed-end lease, the aggregate Net
<PAGE>
Book Value of the vehicles subject to that master lease
agreement as of that day,
- in the case of a repurchase of a consumer lease, the Lease
Balance of that consumer lease as of that day plus, in the
case of a closed-end lease, the Net Book Value of the vehicle
subject to that consumer lease as of that day,
- in the case of a repurchase of a lease, the Lease Balance of
that lease as of that day plus, in the case of a closed-end
lease, the Net Book Value of the vehicle subject to that lease
as of that day or
- in the case of a repurchase of a fleet management receivable,
the amount owing under that receivable as of the first day of
the next succeeding Monthly Period.
The obligation of Raven Funding to repurchase the assets as to which a
breach has occurred and is continuing is our sole remedy against Raven
Funding for that breach.
Lease SUBI and Fleet Receivable SUBI
Lease SUBI. On June 30, 1999, Raven Funding directed Vehicle
Management Services, as the UTI trustee, to identify and allocate on the
books and records of the origination trust an initial separate portfolio
of the origination trust's assets under a supplement to the origination
trust's trust agreement. That portfolio, referred to in this prospectus
as the Lease SUBI, is described in this prospectus under the caption
"Asset Characteristics". The Lease SUBI also includes Raven Funding's
rights under the Contribution Agreement and the Asset Purchase Agreement
relating to those assets. The Lease SUBI represents a beneficial
interest in the assets of the origination trust allocated to the Lease
SUBI and our Lease SUBI Certificate represents a 100% beneficial interest
in those assets. Raven Funding transferred the Lease SUBI Certificate to
us under the Transfer Agreement.
The Lease SUBI Certificate contains an express written release
and subordination of any claim by us to any proceeds or assets of the UTI
trustee, the Delaware trustee or the SUBI trustee and to all of the
assets of the origination trust other than those from time to time
allocated to the Lease SUBI. For more information about the origination
trust and the allocation of the assets and liabilities of the origination
trust, see "Origination Trust and the Servicing Agreement -- Origination
Trust".
Raven Funding is not obligated to direct the UTI trustee to
allocate additional master lease agreements or additional consumer leases
to the Lease SUBI, but it is Raven Funding's current intention to
continue to direct the UTI trustee to allocate to the Lease SUBI all
additional master lease agreements and consumer leases entered into by
the origination trust qualifying as Eligible Master Leases and Eligible
Consumer Leases, respectively. Raven Funding is obligated to assign and
<PAGE>
direct the UTI trustee to allocate to the Lease SUBI all vehicles ordered
at the request of a lessee party to a master lease agreement allocated to
the Lease SUBI together with the lease subsequently entered into by the
origination trust for that vehicle.
Under the Servicing Agreement, Vehicle Management Services, as
servicer, is obligated, on behalf of the UTI trustee and at the direction
of Raven Funding, from time to time to identify and allocate on the books
and records of the origination trust those leases, vehicles and related
assets of the origination trust allocated to the Lease SUBI from time to
time as described in this prospectus.
Eligibility Criteria. Each of the master lease agreements and
consumer leases allocated to the Lease SUBI must be Eligible Master
Leases and Eligible Consumer Leases, respectively. Each lease, the
Lease Balance of which is included in the Aggregate Lease Balance, is
required to be an Eligible Lease. Each vehicle ordered at the request of
a lessee party to a master lease agreement allocated to the Lease SUBI,
the cost of which is included in the Aggregate Paid-In Advance Balance,
is required to be an Eligible Paid-In Advance Vehicle. Vehicle Management
Services, as servicer, is obligated to make representations regarding the
satisfaction of these eligibility criteria as described under
"Origination Trust and the Servicing Agreement--The Servicing Agreement--
Representations as to Eligibility".
Fleet Receivable SUBI. On June 30, 1999, Raven Funding directed
Vehicle Management Services, as the UTI trustee, to identify and allocate
on the books and records of the origination trust a second separate
portfolio of the origination trust's assets under a supplement to the
origination trust's trust agreement. That portfolio, referred to in this
prospectus as the Fleet Receivable SUBI, consists of an ownership
interest in
- all fleet management receivables acquired from time to time
by Raven Funding under the Receivables Purchase Agreement and
contributed by Raven Funding to the origination trust under
the Contribution Agreement,
- Raven Funding's rights under the Receivables Purchase
Agreement contributed to the origination trust by Raven
Funding and
- all of the assets of the origination trust related to the
fleet management receivables and the Receivables Purchase
Agreement, including, without limitation, the origination
trust's rights under the Contribution Agreement relating to
the fleet management receivables and the Receivables Purchase
Agreement.
The Fleet Receivable SUBI represents a beneficial interest in the assets
of the origination trust allocated to the Fleet Receivable SUBI and our
Fleet Receivable SUBI Certificate and the certificate retained by Raven
Funding collectively represent a 100% beneficial interest in those
<PAGE>
assets. Raven Funding transferred the Fleet Receivable SUBI Certificate
to us under the Transfer Agreement.
On each payment date, Raven Funding is obligated under the
Receivables Purchase Agreement to acquire from Vehicle Management
Services and under the Contribution Agreement has contributed to the
origination trust all fleet management receivables owned by Vehicle
Management Services as of the close of business on the first day of the
current Monthly Period.
Our Fleet Receivable SUBI Certificate represents an interest in
the Fleet Receivable SUBI in an amount equal to the lesser of $80,000,000
and the sum of the amounts owing under the Eligible Receivables held by
the origination trust. The certificate retained by Raven Funding
represents an interest in the Fleet Receivable SUBI in the amount by
which the sum of the amounts owing under the Eligible Receivables held by
the origination trust exceed $80,000,000. The certificate retained by
Raven Funding is not collateral for the notes.
The Fleet Receivable SUBI Certificate contains an express written
release and subordination of any claim by us to any proceeds or assets of
the UTI trustee, the Delaware trustee or the SUBI trustee and to all of
the assets of the origination trust other than those from time to time
allocated to the Fleet Receivable SUBI. For more information about the
origination trust and the allocation of the assets and liabilities of the
origination trust, see "Origination Trust and the Servicing Agreement --
Origination Trust".
Under the Servicing Agreement, Vehicle Management Services, as
servicer, is obligated, on behalf of the UTI trustee and at the direction
of Raven Funding, from time to time to identify and allocate on the books
and records of the origination trust the fleet management receivables and
related assets of the origination trust allocated to the Fleet Receivable
SUBI from time to time as described in this prospectus.
Collections on the fleet management receivables are intended to
supplement the collections on the leases allocated to the Lease SUBI
providing yield enhancement and additional credit enhancement to the
notes.
Amendments to Lease SUBI and Fleet Receivable SUBI Supplements.
The trust agreement of the origination trust, as supplemented by the
supplements creating the Lease SUBI and the Fleet Receivable SUBI and as
it relates solely to the Lease SUBI or the Fleet Receivable SUBI may be
amended by Raven Funding
- with the consent of the UTI trustee, the Delaware trustee and
the SUBI trustee, but without the consent of any other person,
to correct any inconsistency or cure any ambiguity or errors
in the trust agreement or the supplements only in a manner
which would have no adverse effect on us or the indenture
trustee or
<PAGE>
- with the consent of the UTI trustee, the Delaware trustee and
the SUBI trustee (to the extent adversely affected thereby),
us and the indenture trustee, to effect any other amendment.
We have agreed not to agree to any amendment, modification,
waiver, supplement, termination, waiver or surrender of the terms of any
of the Origination Trust Documents, or waive timely performance or
observance by the origination trust under the Origination Trust Documents
without the prior written consent of the indenture trustee or the holders
of a Majority in Interest of each series of notes.
Interest Rate Caps
Interest Rate Caps for Fixed Rate Leases. On the closing date,
we will have an amortizing interest rate cap from Bank of America, N.A.
in respect of the fixed rate leases allocated to the Lease SUBI having
- a notional amount at least equal to the aggregate Unit Balance
of all those leases on the closing date and on each payment
date after the closing date at least equal to the aggregate
scheduled Unit Balance of all those leases and
- an effective strike rate based on a one-month eurodollar rate
at most equal to the weighted average fixed rate of interest
on those leases minus 0.__% per annum.
In order for a fixed rate lease allocated to the Lease SUBI after
the closing date to be an Eligible Lease, we will be required to have an
interest rate cap in respect of that lease from a bank or other financial
institution having short-term debt ratings of "A-1+" from Standard &
Poor's and "P-1" from Moody's and long-term unsecured debt ratings of at
least "AA-" from Standard & Poor's and "Aa3" from Moody's having
- an initial notional amount at least equal to the initial Unit
Balance of that lease and on each payment date a notional
amount at least equal to the scheduled Unit Balance of that
lease and
- an effective strike rate based on a one-month eurodollar rate
at most equal to the fixed rate of interest on that lease
minus 0.__% per annum.
Interest Rate Cap for Floating Rate Leases. On the closing date,
we will be required by the indenture supplement relating to the series
2000-1 notes to have an interest rate cap from a bank or other financial
institution having short-term debt ratings of "A-1+" from Standard &
Poor's and "P-1" from Moody's and long-term unsecured debt ratings of at
least "AA-" from Standard & Poor's and "Aa3" from Moody's having
- a notional amount on each payment date at least equal to the
lesser of
<PAGE>
- the average daily Series 2000-1 Invested Percentage during
the Monthly Period preceding that payment date of the
aggregate Unit Balance of all fixed rate leases allocated
to the Lease SUBI as of the last day of that Monthly Period
that were not fixed rate leases when initially allocated to
the Lease SUBI or on the closing date and
- the sum of the aggregate principal amount of the series
2000-1 notes and the aggregate liquidation preference of the
preferred membership interests relating to the series 2000-1
notes on that payment date and
- an effective strike rate based on a one-month eurodollar rate
at most equal to the weighted average fixed rate of interest
on those fixed rate leases minus 0.__% per annum.
The notional amount of this interest rate cap will not be required to
cover any fixed rate lease that was a floating rate lease when initially
allocated to the Lease SUBI or on the closing date if we elect to obtain
an interest rate cap for that fixed rate lease as though it were a fixed
rate lease when initially allocated to the Lease SUBI.
The Chase Manhattan Bank will provide the initial interest rate
cap in respect of the floating rate leases allocated to the Lease SUBI.
Downgrade of Interest Rate Cap Providers. If the short-term debt
rating of the provider of any of our interest rate caps falls below "A-
1+" from Standard & Poor's or "P-1" from Moody's or the long-term
unsecured debt rating of the provider of any of our interest rate caps
falls below "AA-" from Moody's or "Aa3 " from Standard & Poor's, we will
be obligated to obtain an equivalent interest rate cap from a bank or
other financial institution having short-term debt ratings of "A-1+" from
Standard & Poor's and "P-1" from Moody's and long-term unsecured debt
ratings of at least "AA-" from Standard & Poor's and "Aa3" from Moody's
within 30 days of the decline in credit rating unless that provider
provides some form of collateral for its obligations under its interest
rate cap and we and the indenture trustee receive written confirmation
from each rating agency that has been requested by us to issue a rating
applicable to the series 2000-1 notes or the preferred membership
interests relating to the series 2000-1 notes that that arrangement will
not result in the reduction or withdrawal of the current rating of the
series 2000-1 notes or of the preferred membership interests relating to
the series 2000-1 notes.
We will not permit any interest rate cap that we are required to
maintain to be terminated or transferred in whole or in part unless we
have obtained a replacement interest rate cap for that interest rate cap.
Credit Enhancement
We will provide the following credit enhancement for the series
2000-1 notes:
<PAGE>
- overcollateralization to the extent that the Series 2000-1
Allocated Adjusted Aggregate Unit Balance exceeds the
aggregate principal amount of the series 2000-1 notes,
- the Fleet Receivable SUBI Certificate and the portion of the
amounts payable to us as its holder allocated to the series
2000-1 notes,
- amounts withdrawn from the gain on sale account and allocated
to the series 2000-1 notes,
- amounts on deposit in the reserve account for the series 2000-
1 notes and
- amounts on deposit in the yield supplement account for the
series 2000-1 notes.
Required Enhancement Amount
We are required to maintain credit enhancement for the series
2000-1 notes in the form of overcollateralization and/or amounts on
deposit in the reserve account for the series 2000-1 notes in an amount
at least equal to the Required Enhancement Amount.
The Required Enhancement Amount will equal 14.9425% of the
initial aggregate principal amount of the series 2000-1 notes unless it
increases because one of the lease portfolio performance trigger events
or an amortization event occurs. For a description of the lease
portfolio performance trigger events, see the definition of Required
Enhancement Amount in the Glossary.
We are required to maintain overcollateralization for the series
2000-1 notes in an amount equal to the Required Overcollateralization
Amount. The Required Overcollateralization Amount will equal the amount
by which
- the Required Enhancement Amount
exceeds
- the sum of
- the amount on deposit in the reserve account for the series
2000-1 notes
plus
- the amount on deposit in the principal collection subaccount
for the series 2000-1 notes.
If the sum of the aggregate principal amount of the series 2000-1
notes plus the Required Overcollateralization Amount exceeds the Series
<PAGE>
2000-1 Allocated Adjusted Aggregate Unit Balance for two or more business
days, an amortization event will occur.
Required Reserve Account Amount
We are required to maintain $22,538,000, or 2.2538% of the
initial aggregate principal amount of the series 2000-1 notes, on deposit
in the reserve account for the series 2000-1 notes. We will deposit that
amount into the reserve account for the series 2000-1 notes on the
closing date. If the amount on deposit in the reserve account for the
series 2000-1 notes falls below that amount for two or more business
days, an amortization event will occur.
Funds will be withdrawn from and deposited in the reserve account
for the series 2000-1 notes as described under the caption "Description
of the Series 2000-1 Notes--Monthly Distributions".
Required Yield Supplement Account Amount
We are required to maintain on deposit in the yield supplement
account for the series 2000-1 notes on each payment date an amount equal
to the amount by which
- the Yield Shortfall Amount on that payment date
exceeds
- 70% of the product of
- the Series 2000-1 Invested Percentage on that payment date
multiplied by
- the Fleet Receivable Amount on that payment date.
After the occurrence of a Receivables Purchase Termination Event, we will
be required to maintain on deposit in the yield supplement account for
the series 2000-1 notes an amount equal to the Yield Shortfall Amount.
If the amount on deposit in the yield supplement account for the series
2000-1 notes falls below the required amount for two or more business
days, an amortization event will occur.
The Yield Shortfall Amount as of __________, 2000 would have been
$__________, assuming that the weighted average cost of funds for the
series 2000-1 notes and the preferred membership interests relating to
the series 2000-1 notes during the one-month period then ending was
______% per annum. The Yield Shortfall Amount will increase if our
weighted average cost of funds for the series 2000-1 notes and the
preferred membership interests relating to the series 2000-1 notes
increases without a commensurate increase in the variable rates on the
floating rate leases allocated to the Lease SUBI. The Yield Shortfall
Amount will increase if we issue junior preferred membership interests
relating to the series 2000-1 notes. See "Greyhound Funding--Preferred
<PAGE>
Membership Interests--Series 2000-1 Junior Preferred Membership
Interests".
Funds will be withdrawn from and deposited in the yield
supplement account as described under "Description of the Series 2000-1
Notes--Monthly Distributions".
The Origination Trust and the Servicing Agreement
Following is a summary of the provisions of the Origination Trust
Documents. This summary describes the material provisions of the
Origination Trust Documents. This summary is qualified in its entirety
by reference to the provisions of the Origination Trust Documents.
Origination Trust
General. The origination trust was originally established by
Vehicle Management Services as a Maryland common law trust and was
reconstituted as a Delaware statutory business trust on June [28], 1999.
The primary purpose of the origination trust is to take assignments of
and to serve as record holder of title to the leases and fleet management
receivables originated by Vehicle Management Services.
Under the origination trust's trust agreement, the origination
trust may not
- issue beneficial interests in its assets other than
one or more special units of beneficial interests in
specified assets of the origination trust allocated
to that unit and the beneficial interest in the
assets of the origination trust that are not
allocated to any special unit of beneficial
interest,
- issue any securities other than the certificates representing
the beneficial interests described above,
- borrow money,
- make loans or extend credit,
- invest in or underwrite securities,
- offer or issue securities in exchange for its
assets, other than the certificates referred to
above,
- repurchase or otherwise reacquire the certificate
representing the beneficial interest in the assets
of the origination trust that are not allocated to
any special unit of beneficial interest or any
certificate representing a special unit of
beneficial interest in the origination trust other
<PAGE>
than as permitted by or in connection with any
securitization of that certificate,
- acquire any assets other than the assets
contemplated by the trust agreement,
- engage in any trade or business or
- enter into any agreements or contracts other than
agreements relating to the acquisition of the assets
contemplated by the trust agreement or agreements
relating to any securitization of a certificate
representing a special unit of beneficial interest
in the origination trust.
Origination Trust Assets. Under the origination trust's trust
agreement and the Servicing Agreement, the origination trust will hold,
from time to time, the following assets:
- cash,
- leases originated on behalf of the origination trust
by Vehicle Management Services and all security for
those leases,
- the vehicles subject to those leases and all
proceeds of those vehicles, including
- the residual values of those vehicles to be realized through
the exercise by the lessees of purchase options under those
leases,
- the proceeds of sale of those vehicles to third parties and
- payments received from any other persons with respect to
those vehicles, either directly or through the servicer,
- vehicles ordered at the request of the lessees
party to the master lease agreements and all
proceeds of those vehicles, including
- the proceeds of sale of those vehicles and
- payments received from the related lessees or any other
persons with respect to those vehicles, either directly or
through the servicer,
- the certificates of title or other evidence of
ownership of the vehicles,
- all of the lessor's rights under the leases and in
respect of the related vehicles,
<PAGE>
- the insurance policies and the rights under those
policies or proceeds from those policies maintained
by Raven Funding, Vehicle Management Services, any
affiliate of either of them or any lessee to the
extent those policies cover or apply to the leases
or the related vehicles,
- the fleet management receivables generated by
Vehicle Management Services and acquired from
Vehicle Management Services by Raven Funding from
time to time on a revolving basis under the terms of
the Receivables Purchase Agreement and all proceeds
of the fleet management receivables,
- all of Raven Funding s rights (but not its
obligations) under the Receivables Purchase
Agreement, the Contribution Agreement and the Asset
Purchase Agreement and
- all proceeds of those assets.
Special Units of Beneficial Interest. Raven Funding, as the
initial beneficiary of the origination trust, may from time to time
direct Vehicle Management Services, as the UTI trustee, to identify and
allocate one or more separate portfolios of origination trust assets to
be accounted for independently within the origination trust and allocated
to a special unit of beneficial interest. Raven Funding, as the initial
beneficiary, owns the beneficial interest in the assets of the
origination trust that are not so allocated to any special unit of
beneficial interest. Each special unit of beneficial interest is
represented by one or more certificates and is created under a supplement
to the origination trust's trust agreement that amends that trust
agreement only with respect to that special unit of beneficial interest.
The origination trust holds all of its assets on behalf of its
beneficiaries. Each portfolio of the origination trust's assets will be
segregated from all other of the origination trust's assets on the books
and records of Vehicle Managements Services, acting as the UTI trustee
and the servicer. The holders and pledgees of any special unit of
beneficial interest in the origination trust will have no rights to any
assets of the origination trust other than those allocated to their
special unit of beneficial interest. Each holder or pledgee of any
special unit of beneficial interest will be required to expressly
disclaim any interest in any assets of the origination trust other than
those allocated to its special unit of beneficial interest and to fully
subordinate any claims to those other assets of the origination trust in
the event that that disclaimer is not given effect.
Allocation of Origination Trust Liabilities. Liabilities of the
origination trust generally will be allocated to the portfolio of the
origination trust's assets with respect to which they were incurred. As
a result
<PAGE>
- the assets of the origination trust allocated to the
Lease SUBI Assets generally will not be available to
make payments on or pay expenses relating to any
other special unit of beneficial interest in the
origination trust, such as the Fleet Receivable
SUBI, or the beneficial interest in the assets of
the origination trust that are not allocated to any
special unit of beneficial interest,
- the assets of the origination trust allocated to the
Fleet Receivable SUBI generally will not be
available to make payments on or pay expenses
relating to any other special unit of beneficial
interest in the origination trust, such as the Lease
SUBI, or the beneficial interest in the assets of
the origination trust that are not allocated to any
special unit of beneficial interest and
- the assets of the origination trust not allocated to
any special unit of beneficial interest generally
will not be available to make payments on or pay
expenses relating to the Lease SUBI, the Fleet
Receivable SUBI or any other special unit of
beneficial interest.
However, liabilities of the origination trust that are incurred with
respect to all of the origination trust's assets or that do not relate to
any particular assets of the origination trust will be allocated pro rata
among all assets of the origination trust, including assets allocated to
special units of beneficial interest and those that are not allocated to
any special unit of beneficial interest. If a third party claim is
satisfied out of assets of the origination trust in other proportions,
Vehicle Management Services, as the UTI trustee, will reallocate all
remaining assets of the origination trust among the various portfolios so
that each bears the expense as nearly as possible as if it had been
satisfied out of the proper portfolios. If the origination trust incurs
any liability related to a portfolio of its assets and those assets are
insufficient to cover that liability, the remaining amount of the
liability may be satisfied out of the remaining portfolios of the
origination trust's assets. The same is true with respect to any
liability related to the assets of the origination trust that are not
allocated to any special unit of beneficial interest.
Perfected liens of third-party creditors of the origination trust
in any of the origination trust's assets, including the assets allocated
to the Lease SUBI and the Fleet Receivable SUBI, will take priority over
the interests of the holder of the beneficial interest in those assets,
including those of Raven Funding, the issuer and the indenture trustee in
the assets allocated to the Lease SUBI and the Fleet Receivables SUBI,
because the holder of the beneficial interest will not own directly or
have a direct security interest in the assets of the origination trust
allocated to its special unit of beneficial interest. A general creditor
of the origination trust may obtain a lien on the assets of the
<PAGE>
origination trust regardless of whether its claim would be allocated to
particular assets of the origination trust under the terms of the
origination trust's trust agreement. See "Risk Factors--Our Indirect
Ownership of the Leases, the Vehicles and the Receivables Could Result in
Reduced Payments to You."
Settlor and Initial Beneficiary. Raven Funding is the successor
settlor and the initial beneficiary of the origination trust and is the
holder of the certificate representing a beneficial interest in the
assets of the origination trust not allocated to any special unit of
beneficial interest and the holder of the certificate representing the
portion of the Fleet Receivable SUBI not represented by the Fleet
Receivable SUBI Certificate. Raven Funding may in the future create and
sell or pledge one or more special units of beneficial interest in assets
of the origination trust other than the Lease SUBI and the Fleet
Receivable SUBI in connection with securitizations similar to the
transaction described in this prospectus.
Duties of the Origination Trustees. Vehicle Management Services
is the UTI trustee and Wilmington Trust Company is the Delaware trustee
under the origination trust's trust agreement. Wilmington Trust Company
is also the SUBI trustee with respect to the Lease SUBI and the Fleet
Receivable SUBI. The Delaware trustee and each SUBI trustee must at all
times
- be a bank or trust company organized under the laws of the
United States or one of the fifty states of the United States
or the District of Columbia,
- have capital and surplus of at least $100,000,000 and
- in the case of the Delaware trustee only, have a principal
place of business, or have an agent with a principal place of
business, in the State of Delaware.
The Delaware trustee or a SUBI trustee is not required to be a bank or
trust company as described above if that trustee has appointed a trust
agent that meets that qualification.
Each of the UTI trustee, the Delaware trustee and each SUBI
trustee is obligated to perform only
- the duties that are specified in the origination trust's trust
agreement or in any supplement to the trust agreement entered
into in connection with the issuance of any special unit of
beneficial interest,
- such duties relating to any assets of the origination trust
allocated to a special unit of beneficial interest as may be
directed by Raven Funding, as the initial beneficiary, in a
manner not contrary to the terms of the origination trust's
trust agreement, from time to time, including, without
limitation, in connection with
<PAGE>
- financing transactions of any sort undertaken by
Raven Funding or a special purpose entity secured,
directly or indirectly, by assets of the origination
trust, by special units of beneficial interest in
the assets of the origination trust or by the
beneficial interest in the assets of the origination
trust not allocated to a special unit of beneficial
interest or any interest therein,
- any sale by Raven Funding or a special purpose
entity of any interest in one or more special units
of beneficial interest in the origination trust, and
- any other asset securitization or similar
transactions, and
- duties in connection with sales by the origination trust
of assets of the origination trust to the extent
permitted by the terms of any existing securitizations so
long as the certificate of title of any vehicle sold by
the origination trust is amended to reflect the transfer
of ownership of that vehicle from the origination trust
unless applicable law permits the transfer of ownership
of a motor vehicle without an amendment to the vehicle's
certificate of title.
Each of the UTI trustee, the Delaware trustee and each SUBI
trustee will not have any responsibility or liability for
- the validity or sufficiency of the origination
trust's trust agreement, except for its
representations and warranties in the trust
agreement or its due execution of the trust
agreement, or the legality, validity and
enforceability of any security interest in any asset
of the origination trust,
- the perfection or priority of any security interest
in an asset of the origination trust or the
maintenance of any such perfection and priority,
- the efficacy of the origination trust or its ability
to generate the payments to be distributed to Raven
Funding or its permitted assignees, including,
without limitation, the existence, condition,
location and ownership of any of the origination
trust's assets,
- the existence and enforceability of any insurance
policy covering any of the origination trust's
assets,
<PAGE>
- the existence and contents of any lease, vehicle or
fleet management receivable or any computer or other
record of any lease, vehicle or fleet management
receivable,
- the validity of the assignment of any asset to the
origination trust or of any intervening assignment,
- the completeness of any lease,
- the performance or enforcement of any lease or any
contract relating to a fleet management receivable,
- the compliance by Raven Funding or the servicer with
any covenant or the breach by Raven Funding or the
servicer of any warranty or representation in any
document and the accuracy of any such warranty or
representation prior to that trustee's receipt of
notice or other discovery of any noncompliance or
breach,
- any investment of monies by the servicer or any loss
resulting from that investment,
- the acts or omissions of Raven Funding, the
servicer, any other person or any lessee under, or
in connection with the origination of any lease,
- any action of the servicer taken in the name of that
trustee or the acts or omissions of the servicer,
- any action by that trustee taken at the instruction
of Raven Funding, the holder or any pledgee of any
certificate issued by the origination trust or the
servicer,
- the preparation, execution or filing of any tax
returns on behalf of the origination trust or
- the preparation, execution or filing of any document
or report with any securities commission or agency.
None of the UTI trustee, the Delaware trustee or any SUBI trustee
will be under an obligation to exercise any of the discretionary rights
or powers vested in it by the origination trust's trust agreement or to
institute, conduct or defend any litigation related to the origination
trust's trust agreement, at the request, order or direction of Raven
Funding, the assignee or pledgee of the certificate representing a
beneficial interest in the assets of the origination trust not allocated
to any special unit of beneficial interest or any certificate
representing a special unit of beneficial interest in connection with a
securitization or any other beneficiary of the origination trust unless
the requesting party will have offered to that trustee reasonable
<PAGE>
security or indemnity against the costs, expenses and liabilities
incurred by it.
The servicer is obligated to pay each of the Delaware trustee and
the SUBI trustee for the Lease SUBI and the Fleet Receivable SUBI
reasonable compensation and reimbursement of all reasonable expenses for
its services in the exercise and performance of any of the powers and
duties under the origination trust's trust agreement in connection with
the Lease SUBI and the Fleet Receivable SUBI and to indemnify each of
those trustees for related claims.
Each of the UTI trustee, the Delaware trustee and each SUBI
trustee may execute any of its trusts or powers under the origination
trust's trust agreement either directly or by or through agents or
attorneys or one or more custodians. None of these trustees will be
liable for the acts or omissions of any agent or attorney selected by
that trustee in good faith with reasonable care.
Retitling of Vehicles. Each of the holders of special units of
beneficial interest in the origination trust and the holder of the
beneficial interest in the assets of the origination trust not allocated
to any special unit of beneficial interest may at any time, at its
option, request that the vehicles allocated to its interest be retitled
in the name of that holder or a person designated by that holder, that a
lien be noted on the certificates of title relating to those vehicles in
the name of that holder, or a person designated by that holder, or that
possession of those certificates of title be transferred to that holder
or a person designated by that holder. Any of those actions would be
taken at the expense of the holder requesting the action.
Amendment of Origination Trust Agreement. Amendments to the
origination trust's trust agreement require the consent of Raven Funding,
the UTI trustee and any additional consents required under the terms of
any supplement to the trust agreement relating to the issuance of a
special unit of beneficial interest in the origination trust. Amendments
to the origination trust's trust agreement do not require any approval of
the holder of a special unit of beneficial interest in the origination
trust if the holder of that special unit of beneficial interest would not
be adversely affected by that amendment. See "Security for the Series
2000-1 Notes--Lease SUBI and Fleet Receivable SUBI --Amendments to Lease
SUBI and Fleet Receivable SUBI Supplements".
Termination. The origination trust will dissolve upon the
unanimous written agreement of all of the holders of beneficial interests
in the origination trust. Upon the dissolution of the origination trust,
its affairs will be wound up and its property liquidated.
No Petition. Each of the UTI trustee, the Delaware trustee, each
SUBI trustee and the initial beneficiary has agreed that it will not
prior to one year and one day after the date upon which all obligations
under each securitization involving the origination trust have been paid
in full, institute against, or join any other person in instituting
against, the origination trust, Raven Funding, any other special purpose
<PAGE>
entity that is party to a securitization involving the origination trust,
or any general partner of any such special purpose entity that is a
partnership, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The origination trust has agreed not to
institute any bankruptcy, reorganization arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy, insolvency or similar law without the unanimous consent of
all of its trustees and the holders of all beneficial interests in the
origination trust. A SUBI trustee cannot consent to any of those actions
by the origination trust unless directed to do so by the holder of the
applicable special unit of beneficial interest and each assignee or
pledgee of that special unit of beneficial interest and the Delaware
trustee cannot consent to any of those actions unless directed to do so
by all of the holders of beneficial interests in the origination trust.
The Servicing Agreement
General. Subject to the supervision, direction and control of
the origination trust, Vehicle Management Services, as servicer has
agreed to perform all of the obligations of the origination trust in
connection with the leases, the vehicles and the fleet management
receivables under the Servicing Agreement. The servicer's duties
include, among other things,
- contacting potential lessees,
- evaluating the creditworthiness of potential lessees,
- negotiating master lease agreements,
- collecting and posting payments on the leases, fleet
management receivables and any other assets of the
origination trust,
- responding to inquiries of lessees,
- investigating and resolving delinquencies,
- sending payment statements and reporting tax information to
lessees,
- disposing of returned vehicles,
- paying the costs of disposition of vehicles related to
charged-off leases and vehicles rejected by the lessees,
- administering the leases,
- amending payment due dates and making other modifications to
the leases,
- approving vehicle repairs,
<PAGE>
- accounting for collections and
- preparing and filing all tax returns of the origination trust.
The servicer has agreed to cause the origination trust to
- apply for and maintain all licenses, permits and
authorizations necessary and appropriate to acquire, hold
and manage its assets in each jurisdiction where the
ownership of its assets or the nature of its operations
would require it to maintain those licenses, permits or
authorizations,
- file all notices, reports and other required filings in each
jurisdiction where the location of its assets or the nature
of its operations would require it to make a filing and
- pay or cause to be paid all applicable taxes and fees
properly due and owing in connection with its activities.
The servicer has agreed to manage, service, administer and make
collections on the assets allocated to the Lease SUBI and the Fleet
Receivable SUBI using reasonable care, following its credit and
collection policies and using the degree of skill and attention that it
exercises with respect to all comparable fleet vehicle leases and
receivables that it services for itself.
Servicer Representations as to Satisfaction of Eligibility
Criteria. On June 30, 1999, in connection with Raven Funding s
contribution of assets to the origination trust under the Contribution
Agreement and the allocation of assets to the Lease SUBI, the servicer
delivered an officer's certificate representing and warranting to Raven
Funding, us and the indenture trustee that
- all of the master lease agreements allocated to the Lease
SUBI on June 30, 1999 were Eligible Master Leases as of June
19, 1999,
- all of the leases under those master lease agreements
included in the Aggregate Lease Balance as of June 30, 1999
were Eligible Leases as of June 19, 1999 and
- all of the consumer leases allocated to the Lease SUBI on
June 30, 1999 were Eligible Consumer Leases as of June 19,
1999.
At the time of its origination of each new lease under a master
lease agreement allocated to the Lease SUBI, the servicer is obligated to
determine whether that lease is an Eligible Lease and if it determines
that a new lease is an Eligible Lease and as a result increases the
Aggregate Lease Balance to include that lease, the servicer is deemed to
have represented to us and the indenture trustee that that lease
<PAGE>
constitutes an Eligible Lease as of the first date on which that lease is
included by the servicer in the Aggregate Lease Balance.
As a condition to any allocation of a new master lease agreement
to the Lease SUBI, the servicer is obligated to determine whether that
master lease agreement is an Eligible Master Lease and deliver to Raven
Funding, us and the indenture trustee an officer's certificate
representing that that master lease agreement is an Eligible Master Lease
as of the date of that allocation.
As a condition to any allocation of a new consumer lease to the
Lease SUBI, the servicer is obligated to determine whether that consumer
lease is an Eligible Consumer Lease and deliver to Raven Funding, us and
the indenture trustee an officer's certificate representing that that
consumer lease is an Eligible Consumer Lease as of the date of that
allocation.
At the time of any acquisition of a vehicle acquired at the
request of a lessee who is party to a master lease agreement allocated to
the Lease SUBI, the servicer is obligated to determine whether that
vehicle is an Eligible Paid In Advance Vehicle and if it determines that
a new vehicle is an Eligible Paid in Advance Vehicle and as a result
increases the Aggregate Paid In Advance Balance to include that vehicle,
the servicer is deemed to have represented to us and the indenture
trustee that that vehicle constitutes an Eligible Paid in Advance Vehicle
as of the first date on which that vehicle is included by the servicer in
the Aggregate Paid In Advance Balance.
If we, Raven Funding, the indenture trustee or the servicer
determines that any of the servicer's eligibility certifications was
incorrect when made or deemed made and that that breach of representation
and warranty materially and adversely affects the collectibility of, or
our interest or the interest of the indenture trustee in, the related
master lease agreement, consumer lease, lease or vehicle ordered at the
request of a lessee, as the case may be, the party discovering that
breach will give prompt written notice to the others. Within 30 days of
its discovery of the breach or notice of the breach to the servicer, the
servicer is obligated to cure in all material respects the circumstances
or condition giving rise to that breach. If the servicer is unable or
unwilling to cure the breach, it will be obligated to purchase that
master lease agreement, consumer lease or lease and the related vehicle
or vehicles or that vehicle acquired at the request of lessee who is
party to a master lease agreement from the origination trust by
depositing into the collection account on the first payment date
following the 30-day period
- in the case of a breach relating to a master lease agreement,
an amount equal to the aggregate Lease Balance of all leases
under that master lease agreement as of the last day of the
preceding Monthly Period plus, in the case of a closed-end
lease, the aggregate Net Book Value of the vehicles subject to
that master lease agreement as of that day,
<PAGE>
- in the case of a breach relating to a consumer lease, an
amount equal to the Lease Balance of that consumer lease as of
the last day of the preceding Monthly Period plus, in the case
of a closed-end lease, the Net Book Value of the vehicle
subject to that consumer lease as of that day,
- in the case of a breach relating to a lease under a master
lease agreement, an amount equal to the Lease Balance of that
lease as of the last day of the preceding Monthly Period plus,
in the case of a closed-end lease, the Net Book Value of the
vehicle subject to that lease as of that day and
- in the case of a breach relating to a vehicle acquired at the
request of a lessee who is party to a master lease agreement,
an amount equal to the cost of that vehicle.
In addition, the servicer will indemnify, defend and hold harmless us and
the indenture trustee and any subsequent servicer, if other than the
current servicer, from and against, any and all loss or liability with
respect to or resulting from its breach of representation and warranty
with respect to any master lease agreement, consumer lease, lease, leased
vehicle or vehicle acquired at the request of a lessee who is party to a
master lease agreement, including, without limitation, the reasonable
fees and expenses of counsel.
Permitted Modifications of Leases and Policies. The servicer is
permitted under the Servicing Agreement to
- modify the terms of a lease allocated to the Lease SUBI,
provided that the modification will not
- decrease any amount payable under the lease if it terminates
early or reduce any payment due under the lease upon its
expiration or
- extend the final termination date for the lease if the lease
would not have been an Eligible Lease at the time it was
first included in the Aggregate Lease Balance had such
extension been effected at that time,
- convert the floating interest rate under any lease to a
fixed rate which is lower than the greater of
- the fixed rate into which that floating rate is converted in
accordance with that lease and
- 1/2 of 1% in excess of the PHH Treasury Note Rate on the
conversion date, or
- amend or modify the standards, policies and procedures,
including but not limited to credit and residual accrual
policies, applied by the servicer in originating leases and
conducting its collection and repossession activities,
<PAGE>
provided that that amendment or modification would not have
a material adverse effect on the collectibility of amounts
owing in respect of the leases or on the interests of the
holders of the special units of beneficial interest in the
assets of the origination trust or any assignee or pledgee
of one of those interests.
Servicing Records. The servicer is obligated to maintain
computer and manual records with respect to the leases, the vehicles, the
fleet management receivables and the other assets of the origination
trust and the Collections as are sufficient to permit
- it to perform its servicing duties in accordance with the
Servicing Agreement and
- the UTI trustee to identify and allocate the assets of the
origination trust on a segregated basis in accordance with
the terms and provisions of the origination trust's trust
agreement.
The servicer is obligated to retain all data, including, computerized
records, together with all operating software and appropriate documenta-
tion relating directly to or maintained in connection with the servicing
of the assets of the origination trust. If a Servicer Termination Event
occurs and the servicer's obligations under the Servicing Agreement are
terminated, the servicer is obligated to deliver those records to the
successor servicer.
Custody of Lease Documents and Certificates of Title. The
servicer in accordance with its policies and procedures is obligated to
take all necessary steps to maintain evidence of the origination trust's
ownership interest in each vehicle on the certificate of title for that
vehicle. The servicer has been authorized by the UTI trustee, the
Delaware trustee and the SUBI trustees to take all reasonably necessary
steps to record the origination trust's ownership interest in a vehicle
if that vehicle is relocated or for any other reason.
The origination trust has appointed Allfirst Financial Center,
National Association, as bailee and custodian of all of the origination
trust's master lease agreements and consumer leases and other related
documents under the Custodian Agreement. The custodian is obligated to
act for the holder of each special unit of beneficial interest in the
origination trust and the holder of the beneficial interest in the assets
of the origination trust not allocated to any special unit of beneficial
interest, and any pledgee or assignee of any such holder, with respect to
the related assets of the origination trust. The custodian is obligated
to follow the directions of those holders and their assignees and
pledgees.
Collections and Application of Collections. The servicer is
obligated to service, administer and collect all amounts due on or in
respect of the leases, the fleet management receivables and the other
assets of the origination trust. The servicer is obligated in accordance
<PAGE>
with its collection policies and procedures to use commercially
reasonable efforts to collect all payments called for under the terms and
provisions of the leases and the fleet management receivables when due.
Subject to the limitations described under the caption "Permitted
Modifications of Leases and Policies" above, the servicer may in
accordance with its policies and procedures grant extensions, rebates,
credits or adjustments in respect of the leases or fleet management
receivables. The servicer may in its discretion waive any late payment
charge that may be collected in the ordinary course of servicing a lease
or a fleet management receivable in accordance with its policies and
procedures.
The servicer is obligated to direct the lessees to make all
payments in respect of the leases and the fleet management receivables to
a lockbox account maintained in the name of the origination trust for the
benefit of the holders of the beneficial interests in the origination
trust. The servicer is obligated to direct any other person making a
payment constituting collections on the assets of the origination trust
to make such payment directly to that lockbox account. The Servicer will
hold in trust for the benefit of the origination trust any Collections
received by it directly and deposit those funds in that lockbox account
or apply them as follows:
- if the collections relate to the Lease SUBI or the
Fleet Receivable SUBI, the servicer will deposit
those funds in the collection account,
- if the collections relate to another special unit of
beneficial interest in the origination trust, the
servicer will deposit those funds in accordance with
the related supplement to the servicing agreement
and
- if the collections relate to the assets of the
origination trust that are not allocated to a
special unit of beneficial interest in the
origination trust, the servicer will pay those funds
as directed by Raven Funding, as the holder of that
interest.
The servicer is obligated to account to the trustees of the
origination trust for each portfolio of assets of the origination trust
separately.
Servicer Advances. On or before each payment date, the servicer
is obligated to make an advance in an amount equal to the amount by which
- the aggregate monthly lease payments billed and unpaid under
all leases and all fleet management receivables billed and
unpaid during the preceding Monthly Period
exceeds
<PAGE>
- the amount of collections received in respect of those
payments during that Monthly Period.
The Servicer is not required to make an advance in respect of
- any lease or fleet management receivable that it reasonably
determines, in its sole discretion, is unlikely to be paid
from subsequent collections on that lease or fleet management
receivable or
- any lease that is considered to be a charged-off lease.
On each payment date, the servicer will be entitled to be reimbursed in
accordance with the Indenture for amounts previously advanced by the
servicer for delinquent monthly lease payments and delinquent fleet
management receivables out of amounts collected in respect of those
delinquent monthly lease payments or delinquent fleet management
receivables during the preceding Monthly Period.
Insurance. The servicer is obligated to use reasonable efforts to
ensure that
- if a lessee is required by the servicer's policies and
procedures to maintain comprehensive, collision and property
damage insurance on the vehicles leased by that lessee from
the origination trust, that that lessee maintains in full
force and effect during the term of its lease that insurance,
naming the origination trust as a loss payee and additional
insured, and
- each lessee maintains public liability, bodily injury and
property damage coverage equal to the greater of the amounts
required by applicable state law or industry standards as set
forth in the lease, naming the origination trust as an
additional insured.
The servicer is obligated at all times to maintain, or cause to
be maintained by an affiliate of the servicer, on behalf of the
origination trust, insurance policies, which may be blanket policies
covering the servicer, the origination trust and some or all affiliates
of the servicer, with respect to the leases, the vehicles and the related
lessees, and will cause each such insurance policy maintained by it or
any of its affiliates to name the origination trust as an additional
insured or loss payee, as appropriate, of at least the types and in at
least the same amounts as are customarily maintained by the servicer and
its affiliates for its own portfolio of leases and the related vehicles.
In addition, under the supplement to the servicing agreement
relating to the Lease SUBI, the servicer is obligated to maintain and
keep in force for the benefit of the origination trust, or cause the
origination trust to have in effect, maintain and keep in force,
insurance covering the assets of the origination trust allocated to the
<PAGE>
Lease SUBI against the following hazards and in the following forms and
amounts:
- contingent and excess automobile liability insurance
policies with Continental Casualty Company, or another
nationally recognized insurance company with a rating of
at least A by A.M. Best, with limits of no less than
$1,000,000 per occurrence, covering losses in the event
that a lessee's primary insurance policy is not
collectible at the time of loss or that a liability claim
exceeds the policy limit of a lessee's primary insurance,
- interim automobile liability insurance coverage with
Continental Casualty Company, or another nationally
recognized insurance company with a rating of at least A
by A.M. Best, with limits of no less than $1,000,000 per
occurrence, covering losses
- prior to the time that a lessee's primary insurance becomes
effective and
- after a lease has terminated and
- umbrella excess liability insurance of not less than
$25,000,000 with an insurer that has a rating of at least
A by A.M. Best.
The servicer's insurance policies are permitted to be subject to
such deductibles or retentions as are consistent with industry practices
of prudent automobile and light truck vehicle lease companies or lessors
and are required to name the origination trust, Raven Funding and us as
additional insureds. Each of these policies is required to
- contain an endorsement by the insurer that any loss will be
payable in accordance with the terms of the policy
notwithstanding any act of negligence of the servicer or other
insured that might otherwise give rise to a defense by the
insurer to its payment of the loss,
- expressly provide that all provisions, except liability for
premiums (which will be solely a liability of the servicer),
and the limits of the insurer s liability under the policy
will operate in the same manner as if there were a separate
policy covering each additional insured and
- provide that if the insurance is to be canceled, terminated or
materially changed, the insurers, or their representatives,
will promptly notify the additional insureds and any
cancellation, termination or change will not be effective
until 30 days (or 10 days for non-payment of premium) after
receipt of notice by the additional insureds.
<PAGE>
Sale of Vehicles upon Expiration or Termination of Leases. When
a lease terminates or expires or a vehicle is otherwise returned to the
origination trust, the servicer is obligated to arrange for the sale of
the related vehicle in accordance with the related lease and its policies
and procedures and to collect from the related lessee any amounts payable
by the lessee under the lease in connection with that expiration,
termination, return and/or disposal. For additional information about how
the servicer disposes of the vehicles, See "Vehicle Management
Services--Lease Termination and Vehicle Disposition".
Sale of Rejected Vehicles. If a lessee does not accept delivery
of a vehicle ordered at its request, the servicer is obligated to arrange
for the sale or other disposition of that vehicle in accordance with its
policies and procedures and to collect from the related lessee any fee,
penalty or other amount payable in connection with that rejection.
Repossessed Vehicles. The servicer is obligated to use
reasonable efforts to repossess or otherwise convert the possession of
any vehicle subject to a delinquent lease in accordance with its policies
and procedures. The servicer is obligated to take whatever actions it
deems necessary or advisable to realize all amounts owing under a
delinquent lease and to sell the related vehicle or vehicles at public or
private sale in accordance with the delinquent lease. The servicer is
entitled to reimbursement out of sales proceeds for all of its reasonable
liquidation expenses. The servicer is not permitted to incur expenses to
repair or repossess any vehicle that has suffered damages unless it
determines that the repair and/or repossession will increase the
liquidation proceeds by an amount greater than the amount of the expenses
of repair or repossession.
Compliance Reports.
--Quarterly Reports. Within ten business days of the last
business day of each quarter, the servicer is obligated to deliver to us
and the indenture trustee a copy of an officer's certificate, dated as of
the end of that fiscal quarter, stating that
- that officer has supervised a review of the
servicer's activities and performance under the
Servicing Agreement during that fiscal quarter and
- to the best of that officer's knowledge, based on
that review, the servicer has fulfilled all its
obligations in all material respects under the
Servicing Agreement during that fiscal quarter or,
if there has been a default in any material respect,
specifying the default known to that officer and the
nature and status of that default.
--Annual Accountants' Reports. The servicer is obligated to cause
a firm of nationally recognized independent certified public accountants
(who may render other services to the servicer) to deliver to us, the
<PAGE>
indenture trustee and each rating agency rating our notes or preferred
membership interests on or before March 31 of each year
- a report covering the preceding year to the effect
that the firm
- has reviewed certain documents and records relating to the
servicing of the assets of the origination trust allocated
to the Lease SUBI and
- based on that review, the firm is of the opinion that the
monthly settlement statements delivered to the holders of
each series of notes for each Monthly Period in that year
were prepared in compliance with the Servicing Agreement,
except for exceptions it believes to be immaterial and other
exceptions that it describes in the report and
- a report to the effect that
- the firm has examined the assertion of the servicer's
management as to the servicer's compliance with certain of
the servicing requirements in the Servicing Agreement during
the preceding year,
- the firms' examination was made in accordance with standards
established by the American Institute of Certified Public
Accountants and
- except as described in the report, the servicer's
management's assertion is fairly stated in all material
respects.
--Quarterly ERISA Reports. The servicer is obligated to deliver
to us, the indenture trustee and each rating agency rating our notes or
preferred membership interests on a quarterly basis, within 45 days after
the end of each quarter, an officer's certificate stating whether if all
"employee benefit plans" subject to Title IV of ERISA which the servicer,
or any entity which is a member of a "controlled group" of which the
servicer is also a member, maintains or sponsors were terminated on the
last day of that quarter or immediately after that date, there would be
any unfunded liabilities with respect to any of those plans, its
participants or beneficiaries or the Pension Benefit Guaranty
Corporation.
Indemnification. The servicer has agreed to indemnify, defend
and hold harmless, among others, the origination trust, Raven Funding, us
and the indenture trustee, on behalf of the holders of the notes, for any
and all liabilities, losses, damages and expenses that may be incurred as
a result of any negligent act or omission by the servicer in connection
with
- its maintenance and custody of the documents relating to the
leases,
<PAGE>
- the servicing of the assets of the origination trust or
- any other activity undertaken or omitted by the servicer with
respect to the Lease SUBI, the Fleet Receivable SUBI or the
Servicing Agreement.
Servicing Fee. The portion of the servicing fee allocable to
the series 2000-1 notes and payable to the servicer out of Collections
allocated to the series 2000-1 notes on each payment date will equal the
product of
- 0.215% per annum
multiplied by
- the Series 2000-1 Allocated Adjusted Aggregate Unit
Balance as of the first day of the preceding Monthly
Period
multiplied by
- the number of days in that Monthly Period divided by
365, or 366.
This fee will be payable on each payment date to the extent that funds
are available in the collection account for the series 2000-1 notes to
pay the fee as described under "Description of the Series 2000-1 Notes--
Monthly Distributions".
Resignation; Delegation. The servicer may not resign from its
obligations and duties under the servicing agreement unless it determines
that its duties under the servicing agreement are no longer permissible
by reason of a change in applicable law or regulations. Any resignation
of the servicer will not become effective until a successor servicer has
assumed the servicer's obligations under the servicing agreement.
The servicer may not assign or delegate any of its rights,
powers, duties or obligations under the servicing agreement except
- an assignment of all of its rights, powers, duties and
obligations to a successor in connection with a consolidation,
merger or conveyance involving the servicer,
- a delegation of any or all of the servicer's duties under the
servicing agreement to any majority owned subsidiary of Avis
Group Holdings or
- a delegation of specific duties to sub-contractors
who are in the business of performing those duties.
By delegating any of its duties, the servicer will not be relieved of its
responsibility for performing those duties and the servicer will remain
obligated and liable for servicing and administering the assets of the
<PAGE>
origination trust. The servicer may delegate its duty to originate
consumer leases to PersonaLease, its wholly-owned subsidiary.
Servicer Termination Events. If a Servicer Termination Event
occurs and is continuing, the SUBI trustee may terminate all or a portion
of the rights and powers of the servicer to service the assets of the
origination trust allocated to the Lease SUBI and the Fleet Receivable
SUBI under the Servicing Agreement. No termination of the servicer will
be effective until the SUBI trustee has appointed a successor servicer.
If servicing is transferred, the servicer will be obligated to use its
commercially reasonable efforts to effect the orderly and efficient
transfer of the servicing of the affected assets to the new servicer. As
the holder of the Lease SUBI Certificate and the Fleet Receivable SUBI
Certificate, we have the right to direct the SUBI trustee to terminate
the servicer. We have agreed in the Indenture not to terminate the
servicer without the prior written consent of the holders of a Majority
in Interest of each series of notes and have agreed to terminate the
servicer at the direction of the holders of a Majority in Interest of
each series of notes.
Among other events, the following events are Servicer Termination
Events:
- the servicer's failure to deposit or transfer any amounts
that are required to be deposited or transferred under
the Servicing Agreement and that failure continues
unremedied for two business days after the discovery of
the failure by the servicer or the receipt by the
servicer of written notice of the failure,
- we, the indenture trustee or the UTI trustee has not
received the monthly settlement statement within three
business days of when due,
- the servicer's default in the due performance and
observance of any other provision of the Servicing
Agreement and that default continues unremedied for 30
days after the earlier to occur of written notice to the
servicer by us or the indenture trustee of the default or
the servicer's discovery of the default,
- the servicer makes a representation, warranty or
statement in the Servicing Agreement or any certificate,
report or other writing delivered under the Servicing
Agreement that was incorrect in any material respect when
made and continues to be incorrect for 30 days after the
earlier to occur of written notice to the servicer by us
or the indenture trustee of the breach or the servicer's
discovery of the breach,
- the servicer creates, either indirectly or directly, or
allows to suffer to exist, any lien on, the Lease SUBI,
the Fleet Receivable SUBI or any assets of the
<PAGE>
origination trust included in or allocated to those
special units of beneficial interest, other than certain
permitted liens or
- the occurrence of certain bankruptcy or insolvency events
with respect to the servicer.
The SUBI trustee, acting at our direction, with the consent or at
the direction of the holders of a Majority in Interest of each series of
notes, may waive any Servicer Termination Event and its consequences.
If the servicer is terminated after the occurrence of a Servicer
Termination Event or the servicer resigns, The Chase Manhattan Bank has
agreed to act as successor servicer under the Servicing Agreement, at
the request of the indenture trustee, acting at the direction of a
Majority in Interest of each outstanding series of notes (or, if there
are no notes outstanding, our direction). The Chase Manhattan Bank may,
if it is unwilling to act as successor servicer, or shall, if it is
legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution
- having a net worth of not less than $100,000,000 as of the
last day of the most recent fiscal quarter for that
institution and
- whose regular business includes the servicing of fleet lease
receivables, as successor servicer under the Servicing
Agreement.
Chase's appointment of a successor servicer would be subject to the
confirmation from each rating agency that has been requested by us to
issue a rating applicable to any outstanding series of notes or any
outstanding series of preferred membership interests that the appointment
of that successor servicer would not result in the reduction or
withdrawal of the current rating of that outstanding series of notes or
that outstanding series of preferred membership interests.
Avis Guaranty. Avis Group Holdings has agreed to guarantee the
due and prompt payment and performance by the servicer of the following
obligations:
- the servicer's indemnification obligations described
above under the caption "--Indemnification",
- the servicer's repurchase obligations following the
breach of a representation made in a certification
of eligibility as described above under the caption
"Servicer Representations as to Satisfaction of
Eligibility Criteria" and
- certain expense reimbursement obligations of the
servicer relating to the administration and
servicing of the Lease SUBI, the Fleet Receivable
<PAGE>
SUBI and the assets of the origination trust
allocated to the Lease SUBI and the Fleet Receivable
SUBI.
The Receivables Purchase Agreement, the Asset Purchase Agreement
and the Contribution Agreement
Following is a summary of the provisions of the Receivables
Purchase Agreement, the Asset Purchase Agreement and the Contribution
Agreement. This summary describes the material provisions of those
agreements. This summary is qualified in its entirety by reference to
the provisions of those agreements.
Receivables Purchase Agreement
Transfers of Fleet Management Receivables. Under the Receivables
Purchase Agreement, Vehicle Management Services has agreed to sell to
Raven Funding on each payment date all fleet management receivables then
owned by it for a purchase price equal to the fair market value of those
receivables. It has also agreed to contribute to Raven Funding on each
payment date any fleet management receivables owned by it as of that
payment date and not sold to Raven Funding.
Vehicle Management Services sells or contributes the following
related property to Raven Funding in connection with each sale or
contribution of fleet management receivables to Raven Funding:
- all rights relating to those receivables under the
related fleet service contracts,
- all collections of those receivables,
- all guaranties, insurance, letters of credit and
other agreements supporting or securing payment of
those receivable and
- all proceeds of those assets.
Representations and Warranties. Vehicle Management Services makes
certain representations and warranties to Raven Funding as of the date of
each sale of fleet management receivables under the Receivables Purchase
Agreement. Those representations and warranties, include, among other
things, that
- each fleet management receivable is an Eligible
Receivable,
- each fleet management receivable was owned by
Vehicle Management Services free and clear of any
claims and Raven Funding will acquire valid and
properly perfected title to that fleet management
receivable,
<PAGE>
- the transfer of each fleet management receivable and
the related property constitutes a valid sale or
contribution of all right, title and interest of
Vehicle Management Services to that fleet management
receivable and the related property and that
transfer is perfected and of first priority under
applicable law and
- Vehicle Management Services has no knowledge of any
fact that would cause it to expect that any payments
on those fleet management receivables will not be
paid in full when due or that is reasonably likely
to cause or result in any other material adverse
effect with respect to those fleet management
receivables.
Conditions to Transfers. Each sale or contribution of fleet
management receivables to Raven Funding under the Receivables Purchase
Agreement is subject to the condition, among others, that
- the representations and warranties of Vehicle Management
Services in the Receivables Purchase Agreement are true and
correct and
- No Servicer Termination Event or Receivables Purchase
Termination Event, or any occurrence or event which, with the
giving of notice, the passage of time or both, will be a
Receivables Purchase Termination Event, has occurred and is
continuing or would result after giving effect to the
transfer.
Receivables Purchase Termination Events. If a Receivables
Purchase Termination Event occurs, Vehicle Management Services will stop
selling or contributing fleet management receivables to Raven Funding
under the Receivables Purchase Agreement. The occurrence of certain
bankruptcy or insolvency events with respect to Vehicle Management
Services, the origination trust, Raven Funding or Avis Group Holdings
will automatically be a Receivables Purchase Termination Event.
The events listed below will be Receivables Purchase Termination
Events only if after any applicable grace period the indenture trustee or
we declare that a Receivables Purchase Termination Event has occurred.
The indenture trustee may or we may, with the consent of the indenture
trustee and the holders of a Majority in Interest of each outstanding
series of notes, declare that a Receivables Purchase Termination Event
has occurred.
The nonautomatic Receivables Purchase Termination Events are:
- Vehicle Management Services' failure to observe or
perform in any material respect any of its covenants or
agreements in the Receivables Purchase Agreement and that
failure continues unremedied for a period of 30 days,
<PAGE>
- Vehicle Management Services make a representation or
warranty in the Receivables Purchase Agreement that was
incorrect in any material respect when made and continues
to be incorrect in any material respect for 30 days,
- Raven Funding ceases having a valid and perfected first
priority ownership interest in the fleet management
receivables and the related property or any of Raven
Funding or any affiliate of Raven Funding makes that
assertion,
- there is filed against Avis Group Holdings, Vehicle
Management Services, the origination trust or Raven
Funding
- a notice of federal tax lien from the IRS,
- a notice of lien from the Pension Benefit Guaranty
Corporation under Section 412(n) of the tax code or Section
302(f) of ERISA for a failure to make a required installment
or other payment to a pension plan to which either of those
sections applies or
- a notice of any other lien that could reasonably be expected
to have a material adverse effect on the business,
operations or financial condition of Avis Group Holdings,
Vehicle Management Services, the origination trust or Raven
Funding
and after 40 days that notice has not been withdrawn or that
lien has not been released or discharged,
- the Receivables Purchase Agreement or any other
Transaction Document ceases for any reason to be in full
force and effect or
- an amortization event occurs and continues with respect
to each series of notes.
Covenants. Vehicle Management Services agreed to certain
covenants under the Receivables Purchase Agreement, including, among
others, that Vehicle Management Services will:
- originate the fleet management receivables in
accordance with its policies and procedures and
comply in all material respects with the policies
and procedures applicable to the fleet management
receivables and the related fleet service contracts,
- permit Raven Funding to assign all of its right,
title and interest in the fleet management
receivables and the related property and the
<PAGE>
Receivables Purchase Agreement to the origination
trust under the Contribution Agreement,
- permit the origination trust to create and issue to Raven
Funding a special unit of beneficial interest in the fleet
management receivables, the related property and the
Receivables Purchase Agreement,
- make a cash payment to Raven Funding on or prior to
each payment date in an amount equal to the
aggregate amount of reductions made by the servicer
to the billed amounts of the fleet management
receivables during the preceding Monthly Period,
- not sell, transfer, convey, assign or otherwise
dispose of, or assign any fleet management
receivable, the related property or the related
fleet service contracts except as permitted by the
Transaction Documents,
- not create, incur, assume or permit to exist any
adverse claim on or with respect to the fleet
management receivables or the related property
except for permitted liens,
- not extend, amend, forgive, discharge, compromise,
cancel or otherwise modify the terms of any fleet
management receivable or amend, modify or waive any
payment term or condition of any related fleet
service contract applicable to any outstanding fleet
management receivable except in accordance with its
policies and procedures and
- not make any change to its policies and procedures
without the prior written consent of Raven Funding,
us and, while any series of notes are outstanding,
the indenture trustee, that in any respect
materially adversely affects the collectibility of
the fleet management receivables or otherwise has a
material adverse effect.
Repurchase Obligation. If Vehicle Management Services breaches
any of its representations, warranties or covenants in the Receivables
Purchase Agreement and that breach is reasonably likely to have a
material adverse effect on the value of a fleet management receivable or
the interests of Raven Funding or us in that fleet management receivable,
on or prior to the payment date following the discovery of that breach,
Vehicle Management Services is obligated to
- repurchase that fleet management receivable from the
origination trust,
<PAGE>
- transfer ownership of a new fleet management receivable that
is an Eligible Receivable to the origination trust in exchange
for that fleet management receivable or
- make a capital contribution in cash to Raven Funding by
remitting the amount of that contribution to the collection
account
in each case, for or in an amount equal to the billed amount of that
fleet management receivable less any collections received by Raven
Funding or its assignees on that fleet management receivable. Vehicle
Management Services will repurchase a fleet management receivable from
the origination trust by remitting the purchase price to the collection
account.
Asset Purchase Agreement
Sale of Existing Vehicles and Leases. On June 30, 1999, Vehicle
Management Services and PersonaLease sold to Raven Funding under the
Asset Purchase Agreement for a purchase price of $1,922,476,093 all of
their respective rights and interests to the following:
- all vehicles then owned by Vehicle Management
Services or PersonaLease or in which Vehicle
Management Services or PersonaLease had an interest,
together with all proceeds of those vehicles and all
warranties of any kind relating to those vehicles,
- all leases then owned by Vehicle Management Services
or PersonaLease or in which Vehicle Management
Services or PersonaLease had an interest,
- all certificates of title or other evidence of
ownership relating to those vehicles,
- all insurance policies relating to those vehicles
and
- all proceeds of the foregoing assets.
Vehicle Management Services also sold and transferred to Raven
Funding on June 30, 1999 all of its rights to all then-existing
beneficial interests in the origination trust for a purchase price of
$167,561,262.
Representations and Warranties. On June 30, 1999, Vehicle
Management Services and PersonaLease made the following representations
and warranties, among others, to Raven Funding:
- all of its right, title and interest to and in each
lease and vehicle was validly transferred to Raven
Funding and Raven Funding had good and marketable
<PAGE>
title to that vehicle and lease free and clear of
any adverse claim,
- all of its right, title and interest to and in the
existing beneficial interests in the origination
trust were validly transferred to Raven Funding and
Raven Funding had good and marketable title to those
interests free and clear of any adverse claim,
- those existing beneficial interests represented 100%
of the beneficial interest in the assets of the
origination trust,
- the origination trust had good and marketable title
to all leases and vehicles a beneficial interest in
which was represented by those existing beneficial
interests, free of any adverse claim,
- each lease then owned by the origination trust was
an Eligible Lease and
- each master lease agreement then owned by the
origination trust was an Eligible Master Lease and
no adverse selection procedures were employed in
selecting each of those master lease agreements when
transferred to the origination trust.
Covenants. Vehicle Management Services and PersonaLease agreed to
certain covenants under the Asset Purchase Agreement, including, among
others, to
- take whatever actions are required by law to preserve and
protect the interest of Raven Funding in the vehicles, leases
and related property transferred to Raven Funding on June 30,
1999,
- not sell, transfer, convey, assign or otherwise dispose of, or
assign any assets transferred to Raven Funding on June 30,
1999 to anyone else,
- not incur or suffer to exist any lien on any of those assets
and
- pay all reasonable costs and disbursements in connection with
the perfection of Raven Funding's interest in the vehicles,
leases and related property transferred to Raven Funding on
June 30, 1999.
Contribution Agreement
Contribution of Assets. On June 30, 1999, Raven Funding
contributed to the origination trust under the Contribution Agreement all
of its right, title and interest in and to
<PAGE>
- all fleet management receivables and related property acquired
by it under the Receivables Purchase Agreement on June 30,
1999 and to be acquired by it after June 30, 1999,
- all vehicles, leases and the related property transferred to
Raven Funding on June 30, 1999,
- the existing beneficial interests in the origination trust
acquired from Vehicle Management Services on June 30, 1999,
- the Receivables Purchase Agreement and the Asset Purchase
Agreement and
- all proceeds of the foregoing assets.
In connection with the contribution of the leases to the origination
trust, the origination trust agreed to assume the obligations of Raven
Funding under the assigned leases.
Representations by Raven Funding. On June 30, 1999, Raven
Funding represented and warranted to the origination trust that
- none of the assets transferred by Raven Funding to the
origination trust on that date had been contributed, sold,
transferred, assigned or pledged by Raven Funding to any other
person,
- immediately prior to that transfer, Raven Funding had good
title to those assets free and clear of all liens and,
immediately upon their transfer to the origination trust, the
origination trust had good title to those assets, free and
clear of all liens and
- the transfer of those assets by Raven Funding to the
origination trust had been perfected under the applicable
provisions of the Uniform Commercial Code.
Certain Legal Aspects of the Origination Trust and Ownership
of the Vehicles
Origination Trust
General. The origination trust is a statutory 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 the 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 formed by
satisfying those requirements. The origination trust has also made trust
filings or obtained certificates of authority to transact business in the
states where that action is required.
<PAGE>
Potential Applicability of Bankruptcy Code. 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. To
the extent that the origination trust may be eligible for relief under
the Bankruptcy Code or similar applicable state laws, the UTI trustee is
not authorized to commence a case or proceeding under those laws and each
of the other origination trust trustees, Raven Funding and the holders of
the beneficial interests in the origination trust have agreed not to
institute a case or proceeding against the origination trust under any of
those laws for a period of one year and one day after payment in full of
all distributions to the holders of those beneficial interests.
Allocation of Origination Trust Liabilities. The origination
trust holds all of its assets, including the assets allocated to the
Lease SUBI and the Fleet Receivable SUBI, on behalf of the beneficiaries
of the origination trust. Those assets will be allocated among the
beneficial interests in the origination trust as described in this
prospectus under the caption "Origination Trust and the Servicing
Agreement--Origination Trust--Special Units of Beneficial Interest". The
Lease SUBI and the Fleet Receivable SUBI each evidence a beneficial
interest in the assets allocated to that special unit of beneficial
interest, not a direct legal interest in those assets nor an interest in
any other assets of the origination trust.
The liabilities of the origination trust generally will be
allocated to the portfolio of origination trust assets with respect to
which they were incurred as described in this prospectus under the
caption "Origination Trust and the Servicing Agreement--Origination
Trust--Allocation of Origination Trust Liabilities". Any liability to
third parties arising from or in respect of a lease or a vehicle
allocated to the Lease SUBI will be borne by us and any liability to
third parties arising from or in respect of a fleet management receivable
or the related property will be borne by Raven Funding and us. For a
discussion of one of the potential liabilities arising from the ownership
of a vehicle allocated to the Lease SUBI that may be imposed on the
origination trust, see "--Liabilities Associated with Vehicle
Ownership".
The trustees and the beneficiaries of the origination trust and
the assignees and pledgees of those beneficiaries will be bound by the
allocation of liabilities contained in the origination trust's trust
agreement and third parties will be bound by that allocation to the
extent the allocation provision of the Delaware business trust statute is
enforced. This provision of the Delaware business trust statute,
however, has never been litigated in an actual case, and it is possible
that a court would not shield the assets of the origination trust
allocated to the Lease SUBI or the Fleet Receivable SUBI from
liabilities relating to assets of the origination trust allocated to
other special units of beneficial interest if to do otherwise would leave
an injured plaintiff without an adequate remedy.
Indirect Ownership Interest in Origination Trust Assets. We are
<PAGE>
the owner of the Lease SUBI Certificate and the Fleet Receivable SUBI
Certificate and, through that ownership, we have an indirect beneficial
ownership interest in the leases and vehicles allocated to the Lease SUBI
and the fleet management receivables allocated to the Fleet Receivable
SUBI. We do not have a direct ownership interest or security interest in
those assets. Perfected liens of third-party creditors of the
origination trust in those assets will take priority over our interest in
those assets. A general creditor of the origination trust may obtain a
lien on those assets regardless of whether its claim would be allocated
to the assets allocated to the Lease SUBI or the Fleet Receivable SUBI
under the terms of the origination trust's trust agreement. Potential
liens include tax liens arising against Raven Funding or the origination
trust, 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 vehicles. For a discussion of
some of these risks, see "Risk Factors--Our Indirect Ownership of the
Leases, the Vehicles and the Receivables Could Result in Reduced Payments
to You".
Insolvency-Related Matters
Risk of Raven Funding or Origination Trust Bankruptcy. Steps
have been taken to minimize the risk of Raven Funding's bankruptcy or
insolvency. These steps include the creation of Raven Funding as a
wholly-owned, special purpose subsidiary of Vehicle Management Services
under organizational documents that contain the following limitations:
- the requirement that Raven Funding have at all times at least
two "independent managers",
- restrictions on the nature of Raven Funding's business and
- restrictions on Raven Funding's ability to commence a
voluntary case or proceeding under any bankruptcy or
insolvency laws without the affirmative vote of all of its
managers, including its "independent managers".
Each holder or pledgee of a beneficial interest in the
origination trust will be required to expressly disclaim any interest in
the assets of the origination trust allocated to the Lease SUBI and the
Fleet Receivable SUBI and to fully subordinate any claims to those assets
if that disclaimer is not given effect. Although we cannot assure you
that, in the unlikely event of the bankruptcy of Raven Funding, that the
assets of the origination trust would not be treated as part of Raven
Funding's bankruptcy estate, we expect that they would not be included in
Raven Funding's bankruptcy estate and that, even if they were included,
the subordination by the holders and pledgees of the beneficial interests
in the origination trust would be enforceable.
Steps have also been taken to minimize the risk of the
origination trust's bankruptcy. These steps include the creation of the
<PAGE>
origination trust as a Delaware statutory business trust under
organizational documents that contain the following limitations:
- restrictions on the nature of the origination trust's business
and
- restrictions on the origination trust's ability to commence a
voluntary case or proceeding under any bankruptcy or
insolvency laws without the affirmative unanimous vote of all
of its trustees and all of the holders of beneficial interests
in the origination trust.
In addition, each of Vehicle Management Services, the origination
trust and Raven Funding has taken steps in the structuring of the
transactions described in this prospectus and has undertaken to act
throughout the life of those transactions in a manner intended to ensure
that if Vehicle Management Services commences a voluntary case under the
Bankruptcy Code or an involuntary case under the Bankruptcy Code is
commenced against Vehicle Management Services, the separate legal
existence of Vehicle Management Services, on the one hand, and the
origination trust and Raven Funding, on the other hand, would be
maintained and that none of the respective assets and liabilities of the
origination trust or Raven Funding would be consolidated with those of
Vehicle Management Services.
If
- a case or proceeding under any bankruptcy or insolvency laws
were to be commenced by or against either the origination
trust or Raven Funding or
- a court were to order the substantive consolidation of the
assets and liabilities of either the origination trust or
Raven Funding with those of Vehicle Management Services or
- any attempt were made to litigate either of those issues,
delays in distributions on the Lease SUBI Certificate and the Fleet
Receivable SUBI Certificate and possibly reductions in the amount of
those distributions to us may result. Any delays or reductions in
distributions to us may result in delays and reductions in payments to
the holders of the series 2000-1 notes.
Risk of Recharacterization of Transfers. The following
transfers were intended by the parties involved to be "true sales":
- the transfer by Vehicle Management Services and PersonaLease
to Raven Funding of the leases, the related vehicles and the
existing beneficial interests in the origination trust
transferred on June 30, 1999 under the Asset Purchase
Agreement,
<PAGE>
- each sale of fleet management receivables by Vehicle
Management Services to Raven Funding under the Receivable
Purchase Agreement and
- the transfer by Vehicle Management Services to Raven Funding
of the master lease agreements originated by PHH Financial
Services and the related equipment on October 28, 1999.
Raven Funding took the following steps in structuring these
transfers to increase the likelihood that they would be characterized as
"true sales":
- each purchase was or will be made without recourse to Vehicle
Management Services or PersonaLease for credit losses and
- each purchase was or will be made at purchase prices believed
by the parties to represent the fair market value of the
assets being sold.
If each transfer does in fact constitute a "true sale," the
assets transferred and the proceeds thereof would not be part of Vehicle
Management Services' or PersonaLease's, as the case may be, bankruptcy
estate under Section 541 of the Bankruptcy Code should Vehicle Management
Services or PersonaLease become the subject of a bankruptcy case
subsequent to the transfer of those assets to Raven Funding. Although
unlikely, we cannot assure you that a court would not recharacterize any
of these transfers to Raven Funding as a financing by Vehicle Management
Services or PersonaLease, as the case may be, secured by a pledge of
those assets to Raven Funding. If this were to happen, delays and/or
reductions in payments on the series 2000-1 notes could occur.
Liabilities Associated With Vehicle Ownership
Although the origination trust will hold legal title to the
vehicles and we will own a beneficial interest in the vehicles allocated
to the Lease SUBI, the vehicles will be operated by the related lessees
and their respective employees and invitees. State laws differ as to
whether anyone suffering injury to person or property involving a motor
vehicle may bring an action against the owner of the motor vehicle merely
by virtue of that ownership. Moreover, actions by third parties might
arise against the owner of a vehicle based on legal theories other than
negligence, such as product defect or improper vehicle preparation. The
origination trust and the assets of the origination trust are and will
continue to be involved in litigation incidental to the origination
trust's ownership of vehicles and may be subject to liability as a result
of that ownership. However, the laws of many states either do not permit
those suits or limit the lessor's liability to the amount of any
liability insurance that the lessee was required but failed to maintain.
Each of the leases contains or will contain provisions requiring
the lessees to
<PAGE>
- maintain levels of insurance satisfying applicable state law
and
- indemnify the origination trust as lessor for any liability
resulting from any personal injury relating to the operation
of the related leased vehicle.
In addition, the Servicing Agreement requires the servicer to maintain
minimum amounts of contingent excess liability insurance coverage for the
origination trust. For additional information about this insurance
coverage, see "The Origination Trust and the Servicing Agreement--The
Servicing Agreement--Insurance".
If
- liability for a material claim arising from a vehicle
allocated to the Lease SUBI is imposed upon the origination
trust,
- the insurance coverage protecting the origination trust is
insufficient to cover that claim and
- the related lessee fails to fully indemnify the origination
trust for that claim,
the claim will be satisfied out of the proceeds of the vehicles and the
leases allocated to the Lease SUBI. Satisfaction of this claim out of
the assets allocated to the Lease SUBI could reduce amounts available to
make distributions on the series 2000-1 notes.
Employee Benefit Plan Considerations
Restrictions
ERISA and the tax code impose restrictions on Plans and
on persons who have specified relationships to a Plan, persons who are
either parties in interest under ERISA or disqualified persons under the
tax code. Moreover, based on the reasoning of the United States Supreme
Court in John Hancock Mutual Life Ins. Co. v. Harris Trust and Savings
Bank, 114 S. Ct. 517 (1993), the general account of an insurance company
may be deemed to include assets of a Plan investing in that general
account and the insurance company might be treated as a party in interest
with respect to that Plan by virtue of that investment.
Certain employee benefit plans, such as plans maintained by a
governmental employer or a church, if no election has been made under tax
code Section 410(b) by a church plan, are not subject to the requirements
of ERISA or Section 4975 of the tax code. Any governmental employer or a
church plan that is qualified under tax code Section 401(a) and exempt
from taxation under tax code Section 501(a) is subject to certain
prohibited transaction rules in tax code Section 503. Those plans may
also be subject to investment restrictions under other applicable Federal
or state law.
<PAGE>
ERISA and Section 4975 of the tax code prohibit some transactions
between a Plan and persons who are either parties in interest or
disqualified persons with respect to that Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other
penalties and liabilities under ERISA and the tax code for those parties
in interest or disqualified persons or the fiduciaries of the Plan.
ERISA also imposes duties on persons who are fiduciaries of Plans subject
to ERISA.
Investment in Series 2000-1 Notes
Plan Assets Regulation. Under a United States Department of
Labor regulation referred to as the plan assets regulation, if a Plan
invests in an equity interest of an entity, and none of the exceptions
contained in the plan assets regulation apply, the Plan's assets are
deemed to include both the equity interest and an undivided interest in
each of the entity's underlying assets.
If the series 2000-1 notes were deemed to be equity interests in
us and no exception under the plan assets regulation applied, we would be
deemed to hold assets of a Plan that invests in the series 2000-1 notes.
In that case,
- certain transactions involving us might be deemed to
constitute direct or indirect prohibited transactions under
ERISA and Section 4975 of the tax code with respect to that
Plan,
- the administrator and other persons, in providing services
relating to our assets, may be fiduciaries or other parties in
interest with respect to that Plan and
- the fiduciary making the investment in the series 2000-1 notes
on the Plan's behalf may be deemed to have delegated its asset
management responsibility to the persons having authority and
control over our assets.
The plan assets regulation defines an equity interest as any
interest in an entity other than an instrument that is treated as
indebtedness under applicable local law and which has no substantial
equity features. Although the plan assets regulation is silent with
respect to the question of which law constitutes applicable local law for
this purpose, the Department of Labor has stated that these
determinations should be made under the state law governing
interpretation of the instrument in question. In the preamble to the
plan assets regulation, the Department of Labor declined to provide a
precise definition of what features are equity features or the
circumstances under which those features would be considered
"substantial," noting that the question of whether a Plan's interest has
substantial equity features is an inherently factual one, but that in
making a determination it would be appropriate to take into account
whether the equity features are such that a Plan's investment would be a
<PAGE>
practical vehicle for the indirect provision of investment management
services.
We believe that, at the time of their issuance, the series 2000-1
notes should be treated as indebtedness without substantial equity
features for purposes of the plan assets regulation. The debt status of
the series 2000-1 notes could be affected, subsequent to their issuance,
by certain changes in our structure or financial condition.
Prohibited Transaction Rules. Without regard to whether the
series 2000-1 notes are treated as our equity interests, the acquisition
or holding of the series 2000-1 notes by or on behalf of a Plan could be
considered to give rise to a prohibited transaction if we, Vehicle
Management Services, one of the underwriters, the indenture trustee or
any of their respective affiliates is or becomes a party in interest or
disqualified person with respect to that Plan.
One of the following exemptions from the prohibited transaction
rules could be applicable to the purchase and holding of the series 2000-
1 notes by a Plan depending on the type and circumstances of the plan
fiduciary making the decision to acquire the series 2000-1 notes:
- Prohibited Transaction Class Exemption 90-1 regarding
investments by insurance company pooled separate accounts,
- Prohibited Transaction Class Exemption 91-38 regarding
investments by bank collective investment funds,
- Prohibited Transaction Class Exemption 84-14 regarding
transactions effected by "qualified professional asset
managers",
- Prohibited Transaction Class Exemption 95-60 regarding
investments by insurance company general accounts and
- Prohibited Transaction Class Exemption 96-23 regarding
transactions effected by certain "in-house asset managers."
Each of these exemptions contains several conditions which must be
satisfied before the exemption applies. You should also note that even if
the conditions specified in one or more of these exemptions are met, the
scope of relief provided by the exemptions may not necessarily cover all
acts relating to the acquisition and holding of the series 2000-1 notes
by a Plan that might be construed as prohibited transactions under ERISA
or Section 4975 of the tax code.
Because of ERISA's prohibitions and those of Section 4975 of the
tax code discussed above, the series 2000-1 notes, or any interest in the
series 2000-1 notes, may not be purchased or held by any Plan or any
person investing assets of any Plan unless that purchase and holding is
covered by exemptive relief under one or more statutory or administrative
exemptions from the prohibited transaction rules.
<PAGE>
Deemed Representation by Investors. By purchasing a series 2000-
1 note or an interest in a series 2000-1 note, you will be deemed to have
represented that either
- you are not a Plan and no part of the assets used by you to
purchase and/or hold the series 2000-1 notes constitutes
assets of any Plan or
- assuming that the series 2000-1 notes constitute indebtedness
without substantial equity features for purposes of the plan
assets regulation, your purchase and holding of series 2000-1
notes will not result in a non-exempt prohibited transaction
under ERISA or Section 4975 of the tax code.
If you are a Plan prior to your making an investment in the
series 2000-1 notes, you should
- consult with your legal advisors concerning the impact of
ERISA and the tax code and the potential consequences of an
investment in the series 2000-1 notes, taking into account the
specific circumstances of your investment, including whether
any prohibited transactions under ERISA or the tax code may
result from that investment and whether any exemption would be
applicable and
- determine on your own whether all conditions of that exemption
or exemptions have been satisfied and that your acquisition
and holding of the series 2000-1 are entitled to full
exemptive relief.
If you are an insurance company prior to your making an
investment of assets in your general account in the series 2000-1 notes,
you should also consult with your legal advisors concerning the impact of
the decision in John Hancock Mutual Life Insurance Co. v. Harris Trust &
Savings Bank and Section 401(c) of ERISA, including the proposed
Department of Labor regulations under that section, and the extent to
which exemptive relief under Prohibited Transaction Class Exemption 95-60
will apply to your investment.
If you are a Plan fiduciary prior to your making an investment in
the series 2000-1 notes, you should take into account, among other
considerations,
- whether you have the authority to make the investment,
- the composition of the Plan's portfolio with respect to
diversification by type of asset,
- the Plan's funding objectives,
- the tax effects of the investment and
<PAGE>
- whether under ERISA's general fiduciary standards of
investment prudence and diversification, an investment in the
series 2000-1 notes is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Tax Matters
U.S. Federal Income Tax Matters
Except as provided below under the captions "--Non-U.S. Note
Owners of Series 2000-1 Notes" and "--Information Reporting and Backup
Withholding", following is a summary of the principal United States
federal income tax consequences that may be relevant to U.S. Note Owners.
Except as otherwise provided, this summary deals only with U.S. Note
Owners who purchase their series 2000-1 notes upon original issuance and
at their original "issue price" and who hold their series 2000-1 notes as
capital assets.
This summary is based on the current provisions of the tax code,
the Treasury regulations promulgated under the tax code and any relevant
judicial or administrative rulings. The tax code, the Treasury
regulations and judicial and administrative rulings are subject to
change, which change may be retroactive, and differing interpretations.
This discussion does not deal with special classes of beneficial
owners of the series 2000-1 notes, such as
- dealers in securities,
- life insurance companies,
- persons holding series 2000-1 notes as part of a hedge or as a
position in a "straddle,"
- regulated investment companies,
- banks,
- tax-exempt entities or
- persons whose functional currency is not the U.S. dollar.
In addition, this discussion does not address any U.S. alternative
minimum tax or any state, local or foreign tax consequences related to
the purchase, ownership or disposition of a series 2000-1 note.
We urge you to consult your own tax advisers in determining the federal,
state, local, foreign and any other tax consequences to your purchase,
ownership and disposition of series 2000-1 notes.
Classification of the Series 2000-1 Notes. On the closing date,
White & Case LLP will deliver its opinion to the effect that the series
2000-1 notes will be characterized as debt for U.S. federal income tax
<PAGE>
purposes. That opinion will be subject to a number of assumptions,
qualifications and representations. By your acceptance of a beneficial
interest in a series 2000-1 note, you will agree to treat the series
2000-1 notes as debt for U.S. federal income tax purposes.
The following summary assumes that the series 2000-1 notes will
be characterized as debt for U.S. federal income tax purposes. If
contrary to the opinion of tax counsel, the IRS were to assert
successfully that the series 2000-1 notes were not classified properly as
debt for U.S. federal income tax purposes, the series 2000-1 notes would
be treated as our equity interests, which could cause
- us to be classified as a publicly traded partnership taxable
as a corporation and
- our net income, unreduced by any deduction in respect of the
interest paid or accrued on any notes that were
recharacterized as equity, to be subject to an entity-level
corporate income tax.
The imposition on us of an entity-level income tax could reduce the
amounts available to us to make payments on the series 2000-1 notes,
perhaps significantly.
Our Tax Status. On the closing date, White & Case LLP will
deliver its opinion to the effect that we will not be classified as an
association or a publicly traded partnership taxable as a corporation for
U.S. federal income tax purposes. That opinion will be subject to a
number of assumptions, qualifications and representations.
Stated Interest on the Series 2000-1 Notes. The stated interest
on the series 2000-1 notes will constitute "qualified stated interest"
under the applicable Treasury regulations and, consequently, U.S. Note
Owners will include that stated interest in income as ordinary interest
income at the time that stated interest is considered to be received or
accrued in accordance with the U.S. Note Owner's regular method of tax
accounting.
Original Issue Discount. A series 2000-1 note will be treated as
issued with original issue discount only if its "issue price" is less
than its stated principal amount by an amount that is equal to or that
exceeds a statutorily-prescribed de minimis amount. Generally, the "issue
price" of a series 2000-1 note will be the first price at which a
substantial amount of the series 2000-1 notes is sold for money. For
this purpose, sales to any bond house, broker, or similar person or
organization acting in the capacity of an underwriter, placement agent,
or wholesaler are ignored.
We expect that the series 2000-1 notes will not be issued at a
discount equal to or in excess of the statutory de minimis amount, and as
a result will not be considered to be issued with original issue
discount. If any series 2000-1 notes were treated as being issued with
original issue discount, U.S. Note Owners would be required to include
<PAGE>
that original issue discount in gross income on an accrual basis using
the constant-yield method of accrual regardless of their regular method
of tax accounting and in advance of the receipt of the cash representing
that income.
Under applicable Treasury regulations, a U.S. Note Owner with de
minimis original issue discount must include the de minimis original
issue discount in income as stated principal payments on the series 2000-
1 note are made. The includible amount for each payment will equal the
product of
- the total amount of the series 2000-1 note's de minimis
original issue discount
multiplied by
- a fraction, the numerator of which is the amount of the
principal payment made on that payment date and the
denominator of which is the stated principal amount of that
series 2000-1 note.
Any amount of de minimis original issue discount that is includible in
income is treated as an amount received in retirement of the debt
instrument for purposes of tax code Section 1271.
Sale, Exchange or Retirement of the Series 2000-1 Notes. A U.S.
Note Owner generally will recognize gain or loss on the sale, exchange,
retirement or other taxable disposition of a series 2000-1 note in an
amount equal to the difference between the amount realized by that U.S.
Note Owner on that sale, exchange, retirement or other disposition and
that owner's adjusted tax basis in that series 2000-1 note. Except to
the extent attributable to accrued but unpaid interest or original issue
discount, the gain or loss recognized on the sale, exchange, retirement
or other taxable disposition of a series 2000-1 note generally will be
capital gain or loss and generally will be long-term capital gain or loss
if the series 2000-1 note was held for more than one year at the time of
the sale, exchange, retirement or other disposition.
In general, a U.S. Note Owner's adjusted tax basis in a series
2000-1 note will be its cost, increased by the amount of any original
issue discount, market discount, or gain, including de minimis original
issue discount, included in that owner's income with respect to the
series 2000-1 note, and reduced by
- the amount of any payments made on the series 2000-1 note that
are not payments of qualified stated interest and
- the amount of any amortizable bond premium on the series 2000-
1 note.
Optional Prepayment of the Class A-2 Notes. Under the
applicable income Treasury regulations, for purposes of determining the
yield and maturity of the series 2000-1 notes, an unconditional option
<PAGE>
held by us to redeem all or part of the series 2000-1 notes is deemed
exercised if our exercise of the option would minimize the yield on the
series 2000-1 notes. We will have the option to prepay the class A-2
notes, in whole but not in part, on any payment date if on that payment
date the outstanding principal amount of the class A-2 notes is less than
or equal to 10% of the initial aggregate principal amount of the series
2000-1 notes. The prepayment price for the class A-2 notes will be equal
to the aggregate principal amount of the class A-2 notes plus accrued and
unpaid interest. Because our option to prepay the class A-2 notes would
not be expected to reduce the yield on the series 2000-1 notes if
exercised, this prepayment option should be disregarded in determining
the yield and maturity of a class A-2 note.
Non-U.S. Note Owners. If the interest or original issue discount
paid or accrued on a series 2000-1 note owned by a Non-U.S. Note Owner is
not effectively connected with the conduct of a trade or business within
the United States by the Non-U.S. Note Owner, that interest or original
issue discount generally will be considered "portfolio interest," and
will not be subject to United States federal income tax or withholding
tax provided that the Non-U.S. Note Owner
- does not actually or constructively own 10% or more
of our capital or interests in our profits,
- is not a "controlled foreign corporation" with
respect to which either we or Avis Group Holdings is
a "related person" within the meaning of the tax
code and
- the Non-U.S. Note Owner satisfies the statement
requirement set forth in Section 871(h) and Section
881(c) of the tax code and the Treasury regulations
promulgated under the tax code.
To satisfy the statement requirement referred to above, a Non-
U.S. Note Owner or a financial institution holding a series 2000-1 note
on behalf of the Non-U.S. Note Owner, must provide us or any withholding
agent with a statement to the effect that that Non-U.S. Note Owner is not
a "U.S. person" as that term is defined in the tax code. A "U.S. person"
is essentially equivalent to the definition of a U.S. Note Owner.
Currently, you may satisfy these requirements if
- the Non-U.S. Note Owner provides its name and address and
certifies under penalties of perjury that it is not a U.S.
person, which certification may be made on an IRS Form W-8 or
a successor form or
- a financial institution holding the series 2000-1 note on
behalf of the Non-U.S. Note Owner certifies, under penalties
of perjury, that it has received that statement from the Non-
U.S. Note Owner and it furnishes us or the withholding agent
with a copy of that statement.
<PAGE>
Under Treasury regulations issued on October 6, 1997 and an IRS notice
issued on April 29, 1999, this statement requirement also may be
satisfied with other documentary evidence for interest or original issue
discount paid outside the United States after December 31, 2000 to an
offshore account or through some foreign intermediaries.
If a Non-U.S. Note Owner cannot satisfy the requirements of the
"portfolio interest" exception described above, payments of interest or
original issue discount made to that Non-U.S. Note Owner with respect to
its series 2000-1 notes will be subject to a 30% U.S. federal withholding
tax unless that Non-U.S. Note Owner provides us or the withholding agent
with a properly executed
- IRS Form 1001 or successor form claiming an exemption from or
a reduction in the rate of this withholding tax under the
benefit of an applicable U.S. income tax treaty or
- IRS Form 4224 or successor form stating that the interest paid
on the series 2000-1 note is not subject to such U.S. federal
withholding tax because it is effectively connected with the
Non-U.S. Note Owner's conduct of a trade or business in the
United States.
Under Treasury regulations issued on October 6, 1997 and an IRS notice
issued on April 29, 1999, Non-U.S. Note Owners generally will be required
to provide an IRS Form W-8BEN in lieu of an IRS Form 1001 or an IRS Form
W-8ECI in lieu of an IRS Form 4224 for payments made after December 31,
2000 although alternative documentation may be applicable in some
situations.
If the interest or original issue discount on a Non-U.S. Note
Owner's series 2000-1 note is effectively connected with the conduct of a
U.S. trade or business by the Non-U.S. Note Owner, that interest income
or original issue discount will be exempt from the 30% U.S. federal
withholding tax discussed above but instead will be subject to U.S.
federal income tax on a net income basis in the same manner as if the
Non-U.S. Note Owner were a U.S. Note Owner. In addition, if the Non-U.S.
Note Owner is a foreign corporation, it may be subject to a U.S. branch
profits tax equal to 30% or lower applicable treaty rate of its
effectively connected earnings and profits for the taxable year subject
to adjustments. For this purpose, such interest income or original issue
discount, will be included in that foreign corporation's effectively
connected earnings and profits.
Any gain realized by a Non-U.S. Note Owner upon the sale,
exchange, retirement or other taxable disposition of a series 2000-1 note
generally will not be subject to U.S. federal income or withholding tax
unless
- the gain is effectively connected with a U.S. trade or
business of the Non-U.S. Note Owner,
<PAGE>
- for a Non-U.S. Note Owner who is an individual, that
individual is present in the United States for 183 days or
more in the taxable year in which the sale, exchange,
retirement or other disposition occurs and certain other
conditions are met or
- to the extent that gain is considered accrued but unpaid
interest or original issue discount, the requirements of the
"portfolio interest" exception described above are not
satisfied or a U.S. income tax treaty exemption from U.S.
withholding tax is not available.
If the series 2000-1 notes were recharacterized (as discussed
above under the caption "--Classification of the 2000-1 Notes") and
treated as equity interests in a partnership, other than a publicly
traded partnership taxable as a corporation, that recharacterization
could cause a Non-U.S. Note Owner to be treated as engaged in a trade or
business in the United States. In that event, the Non-U.S. Note Owner
would be required to file U.S. federal income tax returns and, generally,
would be subject to U.S. federal income tax, including, for a Non-U.S.
Note Owner that is a corporation, the U.S. branch profits tax, on its
allocable share of the net income from that partnership. Further,
certain withholding obligations may apply with respect to partnership
income that is allocable to a Non-U.S. Note Owner that is considered to
be a partner in the partnership. That withholding tax would be imposed at
a rate equal to the highest marginal U.S. federal income tax rate
applicable to the relevant Non-U.S. Note Owner. Alternatively, if some
or all of the series 2000-1 notes were recharacterized and treated as
equity interests in a publicly traded partnership taxable as a
corporation, the gross amount of any related dividend distributions to a
Non-U.S. Note Owner generally would be subject to U.S. withholding tax at
the rate of 30% unless that rate were reduced under an applicable U.S.
income tax treaty subject to documentation requirements similar to those
described above.
Special rules may apply to Non-U.S. Note Owners who
- have an office or other fixed place of business in
the U.S.,
- are former U.S. citizens,
- are engaged in a banking, financing, insurance or
similar business in the U.S. or
- are "controlled foreign corporations," "foreign
personal holding companies," "passive foreign
investment companies" or corporations that
accumulate earnings in order to avoid U.S. federal
income tax.
These persons should consult their own U.S. tax advisors before investing
in the series 2000-1 notes.
<PAGE>
Information Reporting and Backup Withholding. In general,
information reporting requirements will apply to
- payments of principal,
- any premium or interest paid on a series 2000-1 note,
- the accrual of original issue discount on a series 2000-1
note,
- the proceeds of the sale of a series 2000-1 note before
maturity within the United States and
"backup withholding" at a rate of 31% will apply if a non-exempt
beneficial owner of series 2000-1 notes fails to provide the
certification described below.
Each beneficial owner of series 2000-1 notes, other than an
exempt beneficial owner, will be required to provide, under penalties of
perjury, a certificate containing that beneficial owner's name, address,
correct federal taxpayer identification number and a statement that that
beneficial owner is not subject to backup withholding. Exempt beneficial
owners include the following:
- corporations,
- tax-exempt organizations,
- Non-U.S. Note Owners,
- qualified pension and profit-sharing trusts and
- individual retirement accounts.
If a non-exempt beneficial owner of series 2000-1 notes fails to
provide the required certification, the indenture trustee will be
required to withhold 31% of the amount otherwise payable to that
beneficial owner and remit the withheld amount to the IRS as a credit
against that beneficial owner's federal income tax liability. Treasury
regulations issued on October 6, 1997 and an IRS notice issued on April
29, 1999 modify certain of the rules regarding backup withholding and
information reporting discussed above generally with respect to payments
on the series 2000-1 notes made after December 31, 2000. In particular,
in the case of payments by a payor within the United States to a foreign
partnership, other than payments to a foreign partnership that qualifies
as a "withholding foreign partnership" within the meaning of those
Treasury regulations and payments to a foreign partnership that are
effectively connected with the conduct of a trade or business in the
United States, the partners of that partnership will be required to
provide the certification discussed above in order to establish an
exemption from backup withholding tax and information reporting
requirements. Moreover, a payor may rely on a certification provided by
a Non-U.S. Note Owner only if that payor does not have actual knowledge
<PAGE>
or a reason to know that any information or certification stated in that
certificate is unreliable.
The above description is not intended to constitute a complete analysis
of all of the tax consequences relating to your acquisition, ownership
and disposition of series 2000-1 notes. Accordingly, we urge you to
consult with your own tax advisors to determine the U.S. federal, state
and local and foreign tax consequences relating to your acquisition,
ownership and disposition of series 2000-1 notes in light of your
particular situation.
State Tax Matters
If we were considered to be an association taxable as a
corporation for either Delaware or Maryland state tax law purposes, we
would be subject to entity level taxation by that state. If the
origination trust were considered to be an association taxable as a
corporation for either Delaware or Maryland state tax law purposes, the
origination trust would be subject to entity level taxation by that
state.
On the closing date, Richards, Layton & Finger, special Delaware
counsel, will deliver a legal opinion to the effect that, assuming that
neither we nor the origination trust will be treated as an association or
a publicly traded partnership taxable as a corporation for U. S. federal
income tax purposes, neither we nor the origination trust will be treated
as an association taxable as a corporation for Delaware state income tax
purposes.
In addition, on the closing date, Piper & Marbury LLP, special
Maryland counsel, will deliver a legal opinion to the effect that,
assuming that neither we nor the origination trust will be treated as an
association or a publicly traded partnership taxable as a corporation for
U.S. federal income tax purposes, and subject to certain other
qualifications and assumptions, neither we nor the origination trust will
be treated as an association taxable as a corporation for Maryland state
income or franchise tax purposes.
Underwriting
We have agreed to sell to the underwriters listed below the
amount of notes of each class set forth next to each underwriter's name.
Each underwriter has agreed to purchase that amount of those notes.
<PAGE>
Principal Principal
Amount Amount of
of Class A-1 Class A-2
Underwriters Notes Notes
------------- ------------ -----------
Chase Securities Inc. . . . . . . . . . . $___,___,___ $____,___,___
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
$ $
Total . . . . . . . . . ============ =============
The price to public, underwriters' discounts and
commissions, the concessions that the underwriters may allow to some
dealers, and the discounts that those dealers may reallow to certain
other dealers, each expressed as a percentage of each class of notes are
as follows:
Underwriting Selling
Price to discounts and concessions, Reallowance,
Public commissions not to exceed not to exceed
-------- ------------- ------------ -------------
Class A-1 Notes (%) (%) (%) (%)
Class A-2 Notes (%) (%) (%) (%)
After the offering is completed, we will receive the
proceeds, after deduction of the underwriting and other expenses, listed
below:
Proceeds to Issuer
(as % of the Underwriting
Proceeds to principal amount of discounts and
Issuer the notes) concessions
----------- ------------------- -------------
Class A-1 Notes ($) (%) ($)
Class A-2 Notes ($) (%) ($)
After the public offering, the public offering price and other
selling terms may be changed by the underwriters.
The underwriters' obligation to purchase any series 2000-1 notes
will be subject to certain conditions. The underwriters have agreed to
purchase all of the series 2000-1 notes or none of them.
We, Vehicle Management Services and Avis Group Holdings have
agreed to indemnify the underwriters, their affiliates and their
respective officers, directors, employees, representatives, agents and
controlling persons against certain liabilities in connection with the
<PAGE>
offer and sale of the series 2000-1 notes, including liabilities under
the Securities Act of 1933, as amended, and to contribute to payments
that the underwriters may be required to make in respect of those
liabilities. We, Vehicle Management Services and Avis Group Holdings have
also agreed to reimburse the underwriters for certain expenses incurred
by them in connection with this offering.
We, together with our affiliates, have agreed for a period of 60
days from the date of this prospectus not to offer for sale, sell,
contract to sell or otherwise dispose of, directly or indirectly, or file
a registration statement for, or announce any offer, sale, contract for
sale of or other disposition of any debt securities issued by us or any
asset-backed securities backed by vehicle leases originated by Vehicle
Management Services or the origination trust, other than the senior
preferred membership interests relating to the series 2000-1 notes to be
issued by us on the closing date, without the prior written consent of
the underwriters.
Each underwriter has represented and agreed that
- it has not offered or sold and will not offer or
sell any series 2000-1 notes to persons in the
United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding,
managing or disposing of investments, as principal
or agent, for the purposes of their businesses or
otherwise in circumstances which have not resulted
and will not result in an offer to the public in
the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995,
- it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the
series 2000-1 notes in, from or otherwise involving
the United Kingdom and
- it has only issued or passed on and will only issue
or pass on in the United Kingdom any document
received by it in connection with the issue of the
series 2000-1 notes to a person who is of a kind
described in Article 11(3) of the Financial
Services Act 1986 Investment Advertisements
(Exemptions) Order 1996, as amended, or is a person
to whom such document may otherwise lawfully be
issued or passed on.
If you purchase your series 2000-1 notes outside the United
States, you may be required to pay stamp taxes and other charges in
accordance with the laws and practices of the country of purchase in
addition to the purchase price of your series 2000-1 notes.
<PAGE>
The series 2000-1 notes are a new issue of securities for which
there is no existing market. The underwriters have advised Vehicle
Management Services and us that they presently intend to make a market
in the series 2000-1 notes as permitted by applicable law. The
underwriters are not obligated to make a market in the series 2000-1
notes and may discontinue any market making at any time at their sole
discretion. Accordingly, we cannot assure you as to the development of
liquidity or of any trading market for the series 2000-1 notes.
The underwriters may engage in over-allotment and stabilizing
transactions and syndicate covering transactions.
- Over-allotment involves sales in excess of the offering
size, which creates a short position for the underwriters.
- Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not
exceed a specified maximum.
- Covering transactions involve purchases of the series
2000-1 notes in the open market after the distribution has
been completed in order to cover short positions.
Such over-allotment and stabilizing transactions and syndicate covering
transactions may cause the price of the series 2000-1 notes to be higher
than they would otherwise be in the absence of such transactions. If the
underwriters engage in stabilizing or syndicate covering transactions,
they may discontinue them at any time.
The underwriters and their respective affiliates have from time
to time provided investment banking, commercial banking or financial
advisory services and products to us and our affiliates, including
Vehicle Management Services and Avis Group Holdings, for which they have
received customary fees and commissions, and expect in the future to
provide those services and products to us and our affiliates for which
they expect to receive customary fees and commissions. [An affiliate of
each of the underwriters may provide liquidity facilities to a multi-
seller commercial paper conduit in connection with that conduit's
investments in the senior preferred membership interests relating to the
series 2000-1 notes.] Chase Securities Inc. is an affiliate of The Chase
Manhattan Bank, the indenture trustee. One or more of the underwriters or
their affiliates may provide us with interest rate caps.
We expect that delivery of the series 2000-1 notes will be made
against payment on or about the date in the last paragraph on the cover
page of this prospectus. The series 2000-1 notes are subject to a
settlement cycle that exceeds three business days. You should note the
initial trading of series 2000-1 notes may be affected by this long
settlement period.
<PAGE>
Legal Matters
The validity of the series 2000-1 notes and certain other
matters governed by U.S. federal and New York state law will be passed
upon for us by White & Case LLP. Certain matters governed by Delaware
state law will be passed upon for us by Richards, Layton & Finger.
Certain matters governed by U.S. federal and New York state law will be
passed upon for the underwriters by Simpson Thacher & Bartlett.
Listing and General Information
We have applied to the Luxembourg Stock Exchange to list the
series 2000-1 notes. In connection with our listing application, copies
of our LLC Agreement and a legal notice relating to the issuance of the
series 2000-1 notes will be deposited with the Registrar of the District
Court in Luxembourg (Greffier en Chef du Tribunal d'Arrondissement a
Luxembourg) where such documents may be examined and copies obtained.
The series 2000-1 notes have been accepted for clearance through
the facilities of DTC, Clearstream Banking and Euroclear. The securities
identification numbers for the series 2000-1 notes are listed below:
International
Securities
Identification
Common Code CUSIP Number Number (ISIN)
----------- ------------ ---------------
Class A-1 Notes
Class A-2 Notes
Our acquisition of the Lease SUBI Certificate and the Fleet
Receivable SUBI Certificate and our other assets, the execution and
delivery by us of the Transaction Documents, the issuance and sale of the
series 2000-1 notes and all actions necessary or appropriate in
connection with these transactions have been authorized under the
authority of our managers by resolutions passed on June 30, 1999 and
______, 2000. We will prepare or cause to be prepared annual financial
statements, copies of which may be obtained at the office of the co-
paying agent in Luxembourg. Copies of the Transaction Documents,
including the forms of series 2000-1 notes, and the monthly settlement
statements will be available for inspection, at the office of the
co-paying agent in Luxembourg.
We are not involved in any administrative, litigation or
arbitration proceedings relating to claims or amounts which are material
in the context of the issuance of the series 2000-1 notes, nor are we
aware that any such proceedings are currently pending or threatened.
Regular meetings of the holders of the series 2000-1 notes will
not be held. We do not publish financial statements on an interim basis.
<PAGE>
Except as disclosed in this prospectus, there has been no
material adverse change, or any development reasonably likely to involve
any material change, in our condition, financial or otherwise, since our
establishment.
Although we have applied to list the series 2000-1 notes on the
Luxembourg Stock Exchange, we cannot guarantee that the application for
listing will be accepted. You should consult with the listing agent in
Luxembourg to determine whether the series 2000-1 notes are listed on the
Luxembourg Stock Exchange.
A copy of our LLC Agreement will, for so long as the series
2000-1 notes are listed on the Luxembourg Stock Exchange, be available
for inspection during usual business hours on any weekday, except public
holidays, at the office of the listing agent in Luxembourg.
Accordingly to Chapter VI, Article 3, point A/II/2 of the Rules
and Regulations of the Luxembourg Stock Exchange, the series 2000-1 notes
traded on the Luxembourg Stock Exchange will be freely transferrable and
therefore no transaction made on the Luxembourg Stock Exchange may be
canceled.
Where You Can Find More Information
We filed a registration statement relating to the series 2000-1
notes with the SEC. This prospectus is part of the registration
statement, but the registration statement contains additional
information.
We will file all required annual, monthly and special SEC
reports and other information.
You may read and copy any reports, statements or other
information we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C., 20549. You can request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also
available to the public on the SEC internet site (http://www.sec.gov).
Experts
The financial statements of Greyhound Funding LLC as of December
31, 1999 and for the period from June 24, 1999 (inception) through
December 31, 1999 included in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report
appearing herein (which report expressed an unqualified opinion and
includes an explanatory paragraph referring to the records maintained by
Greyhound Funding LLC), and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting
and auditing.
The financial statements of D. L. Peterson Trust as of December
31, 1999 and for the period from June 30, 1999 through December 31, 1999
<PAGE>
included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein (which
report expressed an unqualified opinion and includes an explanatory
paragraph referring to the records maintained by D.L. Peterson Trust),
and have been so included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
Glossary of Terms
"Adjusted Aggregate Unit Balance" will equal on any date the
Aggregate Lease Balance minus the sum of
- the Aggregate Lease Adjustment Amount
plus
- 90% of the Aggregate Residual Value Amount
minus the Excess Residual Value Amount
plus
- 90% of the Aggregate Paid-In Advance Balance
minus the Excess Paid-In Advance Amount.
"Administration Agreement" means the agreement between Vehicle
Management Services, the issuer and Raven Funding pursuant to which
Vehicle Management Services has agreed to perform certain administrative
duties of the issuer and Raven Funding under the Transaction Documents.
"Aggregate Lease Adjustment Amount" means on any date during the
period from and including a payment date to but excluding the next
payment date an amount equal to the sum of :
- the greatest of
- the amount by which
- the aggregate Lease Balances of the
Eligible Leases of the lessees having
the five largest aggregate Lease
Balances of Eligible Leases allocated
to the Lease SUBI as of the last day of
the Monthly Period preceding the first
day of that period
exceed
- 15% of the Aggregate Lease Balance as
of that date,
- the amount by which
- the aggregate Lease Balances of the
<PAGE>
Eligible Leases of the lessees having
the ten largest aggregate Lease
Balances of Eligible Leases allocated
to the Lease SUBI as of the last day of
the Monthly Period preceding the first
day of that period
<PAGE>
exceed
- 25% of the Aggregate Lease Balance as
of that date and
- the amount by which
- the aggregate Lease Balances of the
Eligible Leases of the lessee having
the largest aggregate Lease Balance of
Eligible Leases allocated to the Lease
SUBI as of the last day of the Monthly
Period preceding the first day of that
period
exceed
- 4% of the Aggregate Lease Balance as of
that date (or 3% of the Aggregate Lease
Balance if the long-term debt
obligations of that lessee are not
rated at least "Baa3" by Moody's as of
that date),
plus
- the greater of
- the amount by which
- the aggregate Lease Balances
of all Eligible Leases having
remaining terms of longer than
five years allocated to the
Lease SUBI as of the last day
of the Monthly Period
preceding the first day of
that period
exceed
- 15% of the Aggregate Lease
Balance as of that date and
- the amount by which
- the aggregate Lease Balances
of all Eligible Leases having
remaining terms of longer than
seven years allocated to the
Lease SUBI as of the last day
of the Monthly Period
preceding the first day of
that period
<PAGE>
exceed
- 5% of the Aggregate Lease
Balance as of that date,
plus
- the amount by which
- the aggregate Lease Balances of all
Eligible Leases the lessee of which is
a state or local government or any
subdivision thereof, or any agency,
department or instrumentality of a
state or local government allocated to
the Lease SUBI as of the last day of
the Monthly Period preceding the first
day of that period
exceed
- 3.0% of the Aggregate Lease Balance as
of that date,
plus
- the amount by which
- the aggregate Lease Balances of all
Eligible Leases that are consumer
leases allocated to the Lease SUBI as
of the last day of the Monthly Period
preceding the first day of that period
exceed
- 1.0% of the Aggregate Lease Balance as
of that date,
plus
- the amount by which
- the aggregate Lease Balances of all
Eligible Leases having a Lease Balance
in excess of $1,000,000 allocated to
the Lease SUBI as of the last day of
the Monthly Period preceding the first
day of that period
exceed
- 0.50% of the Aggregate Lease Balance as
of that date.
<PAGE>
"Aggregate Lease Balance" means as of any date during the period
from and including a payment date to but excluding the next payment date
an amount equal to the sum of the Lease Balances of each Eligible Lease
allocated to the Lease SUBI as of the last day of the Monthly Period
preceding the first day of that period.
"Aggregate Paid-In Advance Balance" means as of any date during
the period from and including a payment date to but excluding the next
payment date an amount equal to the aggregate price paid to the dealer,
the manufacturer or a vendor for each Eligible Paid-In Advance Vehicle
allocated to the Lease SUBI as of the last day of the Monthly Period
preceding the first day of that period and each additional Eligible Paid-
In Advance Vehicle allocated to the Lease SUBI as of that date, plus any
related delivery charges and taxes and any registration or titling fees.
"Aggregate Residual Value Amount" means as of any date during
the period from and including a payment date to but excluding the next
payment date an amount equal to the aggregate for each vehicle subject to
a closed-end lease allocated to the Lease SUBI as of the last day of the
Monthly Period preceding the first day of that period of the lesser of:
- the Stated Residual Value of that vehicle and
- the Net Book Value of that vehicle.
"Aggregate Unit Balance" means as of any date an amount equal to
the sum of:
- the Aggregate Lease Balance
plus
- the Aggregate Paid-In Advance Balance
plus
- the Aggregate Residual Value Amount.
"Asset Purchase Agreement" means the agreement dated as of June
30, 1999 between Vehicle Management Services, PHH PersonaLease
Corporation and Raven Funding pursuant to which Raven Funding bought all
the vehicles owned by Vehicle Management Services and PHH PersonaLease
Corporation on June 30, 1999 and all of the related leases and other
related property.
"Base Indenture" means the base indenture dated as of June 30,
1999, as amended as of October 28, 1999, between the issuer and the
indenture trustee.
"Capitalized Cost" of any vehicle is the amount identified by
the servicer as the "capitalized cost" of that vehicle, including, if so
provided, delivery charges, taxes and any registration or titling fees.
<PAGE>
"Charged-Off Lease" means a lease which has been or should have
been charged off by the servicer in accordance with its credit and
collection policies or as to which any scheduled lease rental payment is
270 or more days past due.
"Charge-Off Ratio" means for any payment date twelve times the
quotient, expressed as a percentage, of
- the amount by which
- the aggregate Lease Balances of all leases
allocated to the Lease SUBI that became
Charged-Off Leases during the preceding Monthly
Period
exceed
- the aggregate amount of recoveries on Charged-
Off Leases from previous Monthly Periods
received during that preceding Monthly Period
- divided by
- the Aggregate Lease Balance as of the last day
of the second preceding Monthly Period.
"Collections" means:
- all payments on the collateral securing the notes,
including, without limitation,
- all monthly lease payments and other lease
payments on the leases allocated to the Lease
SUBI,
- all proceeds from the sale or other disposition
of the vehicles allocated to the Lease SUBI,
including all amounts received in respect of
Charged-Off Leases (net of certain taxes and
liquidation expenses),
- all insurance proceeds and warranty payments
with respect to the vehicles allocated to the
Lease SUBI,
- all termination payments and excess damage
charges, excess mileage charges or any charges
imposed upon the early termination of a lease
received in respect of a lease allocated to the
Lease SUBI,
- all other payments in respect of the leases
allocated to the Lease SUBI,
<PAGE>
- all payments in respect of the fleet management
receivables and payments by Vehicles Management
Services under the Receivable Purchase
Agreement,
- all payments by Vehicle Management Services or
PHH PersonaLease Corporation under the Asset
Purchase Agreement,
- all payments by Raven Funding under the
Transfer Agreement, and
- all payments in respect of the interest rate
caps that we are obligated to obtain from time
to time in respect of the fixed rate leases
allocated to the Lease SUBI, the interest rate
caps that we will be obligated to obtain under
the indenture supplement relating to the series
2000-1 notes in respect of the floating rate
leases allocated to the Lease SUBI or any
hedging instruments in the collateral securing
any other series of notes, whether payments are
in the form of cash, checks, wire transfers or
other forms of payment and
- all amounts earned on investments of our funds in
accounts maintained under the Indenture.
"Contribution Agreement" means the agreement dated as of June
30, 1999 between Raven Funding and the Origination Trust pursuant to
which Raven Funding contributed to the Origination Trust:
- all of the fleet management receivables and related
property from time to time purchased by it pursuant to
the Receivables Purchase Agreement and
- all of the vehicles and related leases and other
property purchased by it pursuant to the Asset Purchase
Agreement.
"Custodian Agreement" means the agreement between the
Origination Trust and Allfirst Financial Center, National Association
pursuant to which Allfirst Financial Center, National Association has
agreed to act as bailee and custodian of the contracts and lease files
relating to the leases owned by the Origination Trust.
"Delinquency Ratio" means for any payment date the quotient,
expressed as a percentage, of
- the aggregate billings with respect to all leases
allocated to the Lease SUBI and all Fleet Receivables
which were unpaid for 60 days or more from the original
<PAGE>
due date thereof as of the last day of the preceding
Monthly Period
divided by
- the sum of
- the aggregate billings with respect to all
leases allocated to the Lease SUBI and all
Fleet Receivables which were unpaid as of the
last day of the second preceding Monthly Period
plus
- the aggregate amount billed with respect to all
leases allocated to the Lease SUBI and all
Fleet Receivables during the preceding Monthly
Period.
"Eligible Consumer Lease" means a consumer lease that as of the
date allocated to the Lease SUBI satisfied, among other things, the
following eligibility criteria:
- it was not a Charged-Off Lease,
- it was not a consumer lease as to which any amounts
remained unpaid for more than 60 days from the original
due date or which had been declared in default under
Vehicle Management Services' credit and collection
policies,
- it was an obligation of an Eligible Obligor,
- it had an initial term of 60 months or less,
- it was denominated and payable only in U.S. dollars in
the United States,
- it was originated and has been administered since
origination in accordance with applicable law,
- it was originated in accordance with Vehicle Management
Services' origination standards,
- it did not contravene in any material respect any
applicable law and Vehicle Management Services or PHH
PersonaLease Corporation is not in violation in any
material respect of any applicable law in connection
with it,
- it was not subject to any dispute in whole or in part or
to any offset, counterclaim, defense, rescission,
recoupment or subordination,
<PAGE>
- it was the legal, valid and binding obligation of the
lessee,
- the Origination Trust has only one "original"
counterpart of that consumer lease and that original is
held by the custodian,
- it is either an open-end lease or a closed-end lease,
- it is a "hell or high water" net lease under which the
lessee's payment obligations are absolute, unconditional
and noncancellable and not subject to abatement or
adjustment,
- the lessee is required to maintain casualty insurance
with respect to the vehicle subject to that lease in
accordance with Vehicle Management Services' origination
standards,
- any consents, approvals or authorizations necessary for
the assignment and sale of that consumer lease by PHH
PersonaLease Corporation to Raven Funding and by Raven
Funding to the Origination Trust have been obtained,
- if not originated by the Origination Trust, all right,
title and interest in it has been validly sold by PHH
PersonaLease Corporation to Raven Funding pursuant to
the Asset Purchase Agreement and validly assigned by
Raven Funding to the Origination Trust pursuant to the
Contribution Agreement,
- the lessee has accepted the vehicle subject to that
lease,
- it provides for equal monthly depreciation payments and
accrues a finance or other lease charge on the Net Book
Value of the vehicle subject to that lease at a floating
rate at least equal to a specified commercial paper rate
from time to time or at a fixed rate,
- if a closed-end lease, the Stated Residual Value of the
vehicle subject to that lease was no greater than its
estimated value at lease termination published in the
Automotive Lease Guide at origination,
- if that lease accrues finance charges at a fixed rate,
on or before the date on which that consumer lease was
allocated to the Lease SUBI, we held any lease rate cap
with respect to that lease required by the terms of any
indenture supplement,
<PAGE>
- if that lease accrues finance charges at a floating
rate, the lessee has no right to convert that floating
rate to a fixed rate, and
- the vehicle subject to that consumer lease is free and
clear of all liens (other than certain permitted liens)
and the certificate of title for that vehicle (1) is
registered in the name of the Origination Trust and (2)
indicates only a lien in the name of (x) PHH
PersonaLease Corporation, in the case of a consumer
lease originated by PHH PersonaLease Corporation and
assigned to the Origination Trust or a consumer lease
originated by the Origination Trust prior to
September 30, 1999 or (y) Raven Funding, in the case of
all other consumer leases (or, a certificate of title
has been applied for).
"Eligible Deposit Account" means a segregated identifiable trust
account established in the trust department of a Qualified Trust
Institution or a separately identifiable deposit account established in
the deposit taking department of a Qualified Institution.
"Eligible Lease" is either a lease that as of the date allocated
to the Lease SUBI was an Eligible Consumer Lease or a lease that as of
the date allocated to the Lease SUBI was under an Eligible Master Lease
and satisfied, among other things, the following eligibility criteria:
- it had an initial term of 144 months or less and has a
remaining term of 120 months or less,
- the lessee has accepted the vehicle subject to that
lease,
- except for a limited number of equipment leases, if an
open-end lease, it provides for equal monthly
depreciation payments, or if a closed-end lease, it
provides for monthly depreciation payments that over the
term of the lease reduce the Capitalized Cost of the
vehicle subject to that lease to its Stated Residual
Value,
- if it is one of the limited number of equipment leases,
it provides for at least quarterly depreciation
payments, or, if it is also a closed-end lease, it
provides for at least quarterly depreciation payments
that over the term of the lease reduce the Capitalized
Cost of the equipment subject to that lease to its
Stated Residual Value,
- it accrues a finance or other lease charge on the Net
Book Value of the vehicle subject to that lease at a
floating rate at least equal to a specified commercial
paper rate from time to time or at a fixed rate,
<PAGE>
- if a closed-end lease, the Stated Residual Value of the
vehicle subject to that lease was no greater than its
estimated value at lease termination published in the
Automotive Lease Guide at origination or, in the case of
any vehicle the residual value of which is not contained
in the Automotive Lease Guide, the estimated residual
value of that vehicle contained in a comparable industry
source of vehicle values or if such a source is not
available, contained in a source Vehicle Management
Services believes is reasonable,
- on or before the date on which that lease was allocated
to the Lease SUBI, we held any lease rate cap relating
to that lease that is required under the terms of the
Base Indenture or any indenture supplement,
- if that lease accrues finance or other lease charges at
a floating rate and the lessee has the right to convert
the floating rate to a fixed rate, upon conversion, the
fixed rate will be at least equal to the sum of the PHH
Treasury Note Rate on the conversion date and 0.50%,
- the vehicle subject to that lease is free and clear of
all liens (other than certain permitted liens) and if it
is subject to a certificate of title act or statute, the
certificate of title for that vehicle is registered in
the name of the Origination Trust, and
- if the vehicle subject to that lease is subject to a
certificate of title act or statute, its certificate of
title indicates only a lien in the name of (1) Vehicle
Management Services, in the case of a lease originated
by Vehicle Management Services and assigned to the
Origination Trust or a lease originated by the
Origination Trust prior to September 30, 1999 or (2)
Raven Funding, in the case of all other leases (or, a
certificate of title has been applied for), or
- if the vehicle subject to that lease is not subject to a
certificate of title act or statute, all filings
necessary to evidence the security interest of (1)
Vehicle Management Services, in the case of a lease
originated by Vehicle Management Services and assigned
to the Origination Trust, or (2) Raven Funding, in the
case of all other leases, in that vehicle have been made
in all appropriate jurisdictions.
"Eligible Master Lease" means a master lease agreement that as
of the date a lease arising under that master lease agreement or a
vehicle ordered under that master lease agreement is allocated to the
Lease SUBI satisfied, among other things, the following eligibility
criteria:
<PAGE>
- it was not a Charged-Off Lease,
- it was not a master lease agreement as to which 50% or
greater of the billings to the lessee remained unpaid
for more than 60 days from the original due date or
which had been declared in default under Vehicle
Management Services' credit and collection policies,
- it was an obligation of an Eligible Obligor,
- it was denominated and payable only in U.S. dollars in
the United States,
- it was originated and has been administered since
origination in accordance with applicable law,
- it was originated in accordance with Vehicle Management
Services' origination standards,
- it did not contravene in any material respect any
applicable law and Vehicle Management Services is not in
violation in any material respect of any applicable law
in connection with it,
- it was not subject to any dispute in whole or in part or
to any offset, counterclaim, defense, rescission,
recoupment or subordination,
- it was the legal, valid and binding obligation of the
lessee, enforceable against that lessee to pay the full
amount thereof in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency or similar laws and by general equitable
principles,
- the Origination Trust has only one "original"
counterpart of that master lease agreement and that
original is held by the custodian,
- it is either an open-end lease or a closed-end lease,
- it is a "hell or high water" net lease under which the
lessee's payment obligations are absolute, unconditional
and noncancellable and not subject to abatement or
adjustment,
- the lessee is required to maintain casualty insurance or
to self-insure the vehicles subject to that master
lease agreement in accordance with Vehicle Management
Services' origination standards,
- any consents, approvals or authorizations necessary for
the assignment and sale of that master lease agreement
<PAGE>
by Vehicle Management Services to the Origination Trust
have been obtained and
- if not originated by the Origination Trust, all right,
title and interest in it has been validly sold to the
Origination Trust by Vehicle Management Services or
validly assigned to the Origination Trust by Raven
Funding and, if assigned by Raven Funding to the
Origination Trust, was validly sold by Vehicle
Management Services to Raven Funding.
"Eligible Obligor" means a person or entity obligated to make
payments under a master lease agreement, a consumer lease or a fleet
management receivable who satisfies, among other things, the following
eligibility criteria:
- its billing address is located in the United States,
- it is not the United States federal government or any
subdivision or any agency, department or instrumentality
of the United States federal government,
- it is not an affiliate of Avis Rent A Car, Inc. and
- it is not the subject of any voluntary or involuntary
bankruptcy proceeding, unless, in the case of a lessee
under a master lease agreement, a bankruptcy court shall
have entered an order reaffirming that lessee's
obligations under that master lease agreement.
"Eligible Paid-In Advance Vehicle" means a vehicle acquired at
the request of a lessee who as of the date that vehicle is allocated to
the Lease SUBI is party to an Eligible Master Lease or has agreed to be
bound by a master lease agreement.
"Eligible Receivable" means each fleet management receivable
that satisfies the following eligibility criteria:
- it is an obligation of an Eligible Obligor,
- it is not a fleet management receivable that was or
should have been charged off by the servicer in
accordance with its credit and collection policies or
which is 270 or more days past due,
- it is denominated and payable only in U.S. dollars in
the United States,
- it and the related fleet maintenance contract, fleet
management contract, fuel card contract or other service
contract the fees for which are billed or would be
billed by Vehicle Management Services, together with the
leases, do not contravene in any material respect any
<PAGE>
applicable law and Vehicle Management Services is not in
violation in any material respect of any applicable law
in connection with it or the related contract,
- the related contract was originated in accordance with
the Vehicle Management Services' origination standards,
- it has been billed, the goods or services giving rise to
it have been provided and it is payable within 45 days
of the billing date,
- it is an "eligible asset" within the meaning of Rule 3a-
7 promulgated under the Investment Company Act of 1940,
as amended,
- it is not subject to the laws of any jurisdiction whose
laws would prohibit its sale by Vehicle Management
Services to Raven Funding pursuant to the Receivables
Purchase Agreement and its contribution by Raven Funding
to the Origination Trust pursuant to the Contribution
Agreement,
- any consents, approvals or authorizations necessary for
its sale by Vehicle Management Services to Raven Funding
pursuant to the Receivables Purchase Agreement and its
contribution by Raven Funding to the Origination Trust
pursuant to the Contribution Agreement have been
obtained,
- all right, title and interest in it has been validly
sold by Vehicle Management Services to Raven Funding
pursuant to the Receivables Purchase Agreement and
validly assigned by Raven Funding to the Origination
Trust pursuant to the Contribution Agreement,
- the Origination Trust has legal and beneficial ownership
in that fleet management receivable free and clear of
all liens other than certain permitted liens,
- it is not subject to any dispute in whole or in part to
any offset, counterclaim, defense, rescission,
recoupment or subordination,
- it is at all times the legal, valid and binding
obligation of the related obligor, enforceable against
that obligor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency or similar laws and by general equitable
principles and
- it constitutes an "account" or a "general intangible"
under the applicable Uniform Commercial Code.
<PAGE>
"Excess Paid-In-Advance Amount" means as of any date during the
period from and including a payment date to but excluding the next
payment date an amount equal to the greatest of
- the amount by which
- the aggregate prices paid to the dealer, the
manufacturer or a vendor for each Eligible
Paid-In Advance Vehicle allocated to the Lease
SUBI as of the last day of the Monthly Period
preceding the first day of that period and each
additional Eligible Paid-In Advance Vehicle
allocated to the Lease SUBI as of that date,
plus any related delivery charges and taxes and
any registration or titling fees,
exceed
- 10% of the Aggregate Unit Balance as of that
date,
- the amount by which
- the aggregate prices paid to the dealer, the
manufacturer or a vendor for each Eligible
Paid-In Advance Vehicle allocated to the Lease
SUBI for more than 60 days as of the last day
of the Monthly Period preceding the first day
of that period, plus any related delivery
charges and taxes and any registration or
titling fees,
exceed
- 2.5% of the Aggregate Unit Balance as of that
date, and
- the aggregate prices paid to the dealer, the
manufacturer or a vendor for each Eligible Paid-In
Advance Vehicle allocated to the Lease SUBI for more
than 120 days as of the last day of the Monthly Period
preceding the first day of that period of the price paid
to the dealer, the manufacturer or a vendor for that
vehicle plus any related delivery charges and taxes and
any registration or titling fees.
"Excess Residual Value Amount" means as of any date of during
the period from and including a payment date to but excluding the next
payment date an amount equal to the amount by which
- the Aggregate Residual Value Amount as of that date
exceeds
<PAGE>
- 10% of the Aggregate Unit Balance as of that date.
"Fleet Receivable Amount" means on any payment date an amount
equal to the lesser of $80,000,000 and the aggregate amount owing by the
obligors under all Eligible Receivables held by the Origination Trust as
of the first day of the current Monthly Period.
"Fleet Receivable SUBI" means the special unit of beneficial
interest in the pool of fleet management receivables owned by the
Origination Trust.
"Fleet Receivable SUBI Certificate" means the Class C 1999-1B
Sold SUBI Certificate representing the portion of the Fleet Receivable
SUBI transferred by Raven Funding to the issuer pursuant to the Transfer
Agreement.
"Hypothetical Yield Shortfall Amount" for any payment date, will
equal the product of
- the amount by which
- the Minimum Yield Rate for that payment date
exceeds
- the rate on commercial paper set forth in
Statistical Release H.15(519), "Selected
Interest Rates" published by the Board of
Governors of the Federal Reserve System as of
the last day of the preceding Monthly Period
multiplied by
- the Series 2000-1 Invested Percentage on that payment
date of the aggregate Lease Balance of the floating rate
leases allocated to the Lease SUBI as of the last day of
the preceding Monthly Period
multiplied by 2.75.
"Indenture" means the Base Indenture, as amended by the
indenture supplement relating to the series 2000-1 notes to be dated as
of the closing date, between the issuer and the indenture trustee.
"Lease Balance" means as of any date with respect to:
- any open-end lease, an amount equal to the Net Book
Value of the vehicle subject to that lease on that date
and
- any closed-end lease, an amount equal to the sum of all
remaining monthly lease payments (other than payments of
finance charges and other incidental fees) due in
<PAGE>
respect of the vehicle subject to that lease on or after
that date.
"Lease Balance Decline" means for any lease for any payment date
an amount equal to the sum of
- the Lease Balance of that lease as of the last day of
the Monthly Period preceding the Monthly Period
immediately preceding that payment date minus the Lease
Balance of that lease as of the last day of the Monthly
Period immediately preceding that payment date
plus
- if that lease is a closed-end lease, the Net Book Value
of the vehicle subject to that lease if that vehicle was
sold or otherwise disposed of after termination or
expiration of that lease during the Monthly Period
immediately preceding that payment date.
"Lease SUBI" means the special unit of beneficial interest in
the leases and vehicles owned by the Origination Trust and allocated to
the issuer.
"Lease SUBI Certificate" means the 1999-1A Sold SUBI
Certificate representing the Lease SUBI transferred by Raven Funding to
the issuer pursuant to the Transfer Agreement.
"LLC Agreement" means the amended and restated limited liability
company agreement of the issuer dated as of October 30, 1999.
"London Business Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market
and banking institutions in London are not authorized or obligated by law
or regulation to close.
"Majority in Interest" means, with respect to the series 2000-1
notes, holders of class A-1 notes evidencing more than 50% by outstanding
principal amount of the class A-1 notes and holders of class A-2 notes
evidencing more than 50% by outstanding principal amount of the class A-2
notes and, with respect to any other series of notes, holders of that
series of notes evidencing more than 50% by outstanding principal amount
of each class of the notes of that series.
"Management Agreement" means the agreement between Vehicle
Management Services, the issuer and Global Securitization Services, LLC
pursuant to which Global Securitization Services has agreed to perform
certain administrative functions for the issuer.
"Minimum Yield Rate" means for any payment date a rate per annum
equal to the sum of :
<PAGE>
- the weighted average cost of funds of the issuer in
respect of the series 2000-1 notes and the senior
preferred membership interests relating to the series
2000-1 notes and any junior preferred membership
interests relating to the series 2000-1 notes
subsequently issued by us for that payment date,
assuming, in the case of these preferred membership
interests, that dividends accumulated on them at the
highest applicable rate under their terms
plus 0.225%
plus 0.48%.
"Monthly Period" means each period from and including a Period
End Date to but excluding the next succeeding Period End Date.
"Monthly Residual Value Gain" for any Monthly Period means
- the amount by which
- the sum of
- all amounts received by the servicer
during that Monthly Period in
connection with the termination or
expiration of closed-end leases
allocated to the Lease SUBI including,
without limitation,
- sales proceeds of the related
vehicles, net of any and all
out-of-pocket costs and
expenses incurred by the
servicer in connection with
those sales or other
dispositions and any amounts
remitted to the related
lessees as required by
applicable law or the related
lease and
- any and all insurance proceeds
received in connection with
the occurrence of a casualty
event in respect of those
vehicles
plus
- any and all amounts billed the related
lessees during that Monthly Period in
connection with the termination of
<PAGE>
those leases, including any excess
damage charges, excess mileage charges
or any charges imposed upon the early
termination of those leases
exceeds
- the aggregate Net Book Values of all vehicles
allocated to the Lease SUBI that were subject
to closed-end leases and were sold or otherwise
disposed of after termination or expiration of
those leases during that Monthly Period.
"Net Book Value" means as of any date during the period from and
including a payment date to but excluding the next payment date with
respect to a vehicle subject to a lease,
- the Capitalized Cost of that vehicle
minus
- the sum of
- all monthly lease payments billed under that
lease (other than payments of finance charges
and other incidental fees) in respect of that
vehicle through that date
plus
- in the case of a vehicle subject to an open-end
lease, all proceeds from the sale or
disposition of that vehicle received during the
Monthly Period preceding the first day of that
period.
"Non-U.S. Note Owner" means a beneficial owner of series 2000-1
notes that is not a U.S. Note Owner.
"Origination Trust" means the D.L. Peterson Trust, reconstituted
as a Delaware statutory business trust pursuant to the amended and
restated origination trust agreement dated as of June 30, 1999 among
Raven Funding, as successor settlor and initial beneficiary, Vehicle
Management Services, as existing settlor, initial beneficiary and
successor trustee, and Wilmington Trust Company, as trustee.
"Origination Trust Documents" means:
- the agreement pursuant to which the Origination Trust
was formed, including the supplements creating the Lease
SUBI and the Fleet Receivable SUBI,
- the Servicing Agreement,
<PAGE>
- the Custodian Agreement,
- the Lease SUBI Certificate,
- the Fleet Receivable SUBI Certificate,
- the Receivable Purchase Agreement,
- the Asset Purchase Agreement and
- the Contribution Agreement.
"Paid-In Advance Loss Ratio" means for any payment date the
quotient, expressed as a percentage, of
- the amount by which
- the aggregate prices paid to the dealers, the
manufacturers or vendors, plus any related
delivery charges and taxes and any registration
or titling fees, for all vehicles acquired at
the request of a lessee that were sold or
otherwise disposed of after rejection by that
lessee during the preceding Monthly Period
exceed
- all amounts received by the servicer upon,
after or in connection with the sale or other
disposition of all those rejected vehicles
during that Monthly Period and all prior
Monthly Periods, net of any and all out-of-
pocket costs and expenses incurred by the
servicer in connection with the sale or other
disposition, and any and all amounts received
from the lessees in connection with those
rejected vehicles
divided by
- the aggregate prices paid to the dealers, the
manufacturers or vendors, plus any related delivery
charges and taxes and any registration or titling fees,
for all those rejected vehicles.
"Period End Date" means generally the next to last Thursday of
each calendar month unless the next to last Thursday is too close to the
end of the month to permit orderly billing by Vehicle Management
Services, in which case, the Period End Date for that month will be the
third to last Thursday of the month.
"Permitted Investments" means negotiable instruments or
securities, payable in U.S. dollars, issued by an entity organized under
<PAGE>
the laws of the United States of America and represented by instruments
in bearer or registered or in book-entry form which evidence (excluding
any security with the "r" symbol attached to its rating):
- obligations the full and timely payment of which are to
be made by or is fully guaranteed by the United States
of America (other than financial contracts whose value
depends on the values or indices of asset values),
- demand deposits of, time deposits in, or certificates of
deposit issued by, any depositary institution or trust
company incorporated under the laws of the United States
of America or any State who is subject to supervision
and examination by Federal or state banking or
depositary institution authorities and whose
- short-term debt is rated "P-1" or higher by
Moody's and "A-1+" or higher by Standard &
Poor's and
- long-term unsecured debt is rated not lower
than "AA" from Standard & Poor's,
- bankers' acceptances issued by any depositary
institution or trust company described above,
- commercial paper having a rating from Moody's of "P-1"
and from Standard & Poor's of "A-l+",
- investments in money market funds rated "AAAm" by
Standard & Poor's, or otherwise approved in writing by
Standard & Poor's, and Aaa by Moody's, or otherwise
approved in writing by Moody's,
- Eurodollar time deposits having a credit rating from
Moody's of "P-1" and from Standard & Poor's of "A-1+",
- repurchase agreements involving any of the investments
described in the first or third bullets above or
certificates of deposit described in the second bullet
above which are entered into with a depository
institution or trust company having a commercial paper
or short-term certificate of deposit rating of "A-1+" by
Standard & Poor's and P-1 by Moody's or which otherwise
is approved as to collateralization by the Standard &
Poor's and Moody's and
- any other instruments or securities, if Standard &
Poor's and Moody's confirm in writing that the
investment in those instruments or securities will not
adversely affect any of their respective ratings on any
series of our notes or any series of our preferred
membership interests.
<PAGE>
"PHH Treasury Note Rate" means on any day between the 16th day
of the month through the 15th day of the following month, the interest
rate that was quoted in the Federal Reserve Statistical Release (H.15
Report) for two year treasury constant maturities on the 15th day of that
month, or the next business day thereafter if the 15th day of the month
falls on a non-business day.
"Plan" means any one of the following :
- an employee benefit plan, as defined in Section 3(3) of
ERISA,
- a plan or arrangement within the meaning of or subject
to Section 4975 of the tax code, including an individual
retirement arrangement and a "Keogh plan" or
- any entity whose underlying assets include plan assets
by reason of an employee benefit plan's or plan's
investment in that entity.
"Principal Payment Amount" means on any payment date the product
of
- the average daily Series 2000-1 Invested Percentage
during the preceding Monthly Period
multiplied by
- the sum of
- the Lease Balance Declines for each lease
allocated to the Lease SUBI for that payment
date and
- the aggregate prices paid to the dealers, the
manufacturers or vendors, plus any related
delivery charges and taxes and any registration
or titling fees, for all vehicles acquired at
the request of a lessee that were sold or
otherwise disposed of after rejection by that
lessee during the preceding Monthly Period.
"Qualified Institution" means a depository institution organized
under the laws of the United States of America or any State or
incorporated under the laws of a foreign jurisdiction with a branch or
agency located in the United States of America or any State and subject
to supervision and examination by federal or state banking authorities
which at all times has a short-term certificate of deposit rating from
Moody's of P-1 and from Standard & Poor's of "A-1" and a long-term
unsecured debt rating of not less than Aa3 by Moody's and "AA-" by
Standard & Poor's and, in the case of any institution organized under the
laws of the United States of America, whose deposits are insured by the
Federal Deposit Insurance Corporation.
<PAGE>
"Qualified Trust Institution" means an institution organized
under the laws of the United States of America or any State or
incorporated under the laws of a foreign jurisdiction with a branch or
agency located in the United States of America or any State and subject
to supervision and examination by federal or state banking authorities
which at all times
- is authorized under those laws to act as a trustee or in
any other fiduciary capacity,
- has not less than $1,000,000,000 in assets under
fiduciary management and
- has a long term deposits rating of not less than "BBB-"
by Standard & Poor's and Baa3 by Moody's.
"Receivable Purchase Agreement" means the agreement dated as of
June 30, 1999 between Vehicle Management Services and Raven Funding
pursuant to which Raven Funding buys the fleet management receivables
from Vehicle Management Services on each payment date.
"Receivables Purchase Termination Event" means one of the events
described in this prospectus under the caption "The Receivables Purchase
Agreement, the Asset Purchase Agreement and the Contribution Agreement--
Receivables Purchase Agreement--Receivables Purchase Termination Events."
"Required Asset Amount" means as of any date the sum of the
outstanding principal amount of the series 2000-1 notes plus the Required
Overcollateralization Amount.
"Required Enhancement Amount" means on any date 14.9425% of the
initial aggregate principal amount of the series 2000-1 notes; provided,
however that if on or for any payment date:
- the Three Month Average Charge-Off Ratio exceeds ___%,
- the Twelve Month Average Charge-Off Ratio exceeds ___%,
- the Three Month Average Residual Value Loss Ratio
exceeds ___%,
- the Twelve Month Average Residual Value Loss Ratio
exceeds ___%,
- the Three Month Average Paid-In Advance Loss Ratio
exceeds ___%,
- the Twelve Month Average Paid-In Advance Loss Ratio
exceeds ___% or
- the Three Month Average Delinquency Ratio exceeds ___%,
<PAGE>
the Required Enhancement Amount will equal 15.94% of the aggregate
principal amount of the series 2000-1 notes on that payment date. In
addition after the declaration or occurrence of an amortization event
with respect to the series 2000-1 notes, the Required Enhancement Amount
will equal the Required Enhancement Amount on the date of the declaration
or occurrence of that amortization event.
"Required Overcollateralization Amount" means on any date the
amount by which
- the Required Enhancement Amount
exceeds
- the sum of
- the amount on deposit in the reserve account
for the series 2000-1 notes
plus
- the amount of cash and investments on deposit
in the principal subaccount of the subaccount
of the collection account for the series 2000-1
notes.
"Residual Value Loss" means for any vehicle allocated to the
Lease SUBI that was subject to a closed-end lease and was sold or
otherwise disposed of after termination or expiration of that lease
during a Monthly Period an amount equal to
- the Stated Residual Value of that vehicle
minus
- the sum of
- all amounts received by the servicer during
that Monthly Period in connection with the
termination or expiration of that lease
including, without limitation,
- sales proceeds of that vehicle, net of
any and all out-of-pocket costs and
expenses incurred by the servicer in
connection with that sale or other
disposition and any amounts remitted to
the related lessee as required by
applicable law or the related lease and
- any and all insurance proceeds received
in connection with the occurrence of a
<PAGE>
casualty event in respect of that
vehicle
plus
- any and all amounts billed the related lessee
during that Monthly Period in connection with
the termination of that lease, including any
excess damage charges, excess mileage charges
or any charges imposed upon the early
termination of that lease.
"Residual Value Loss Ratio" means for any payment date the
quotient, expressed as a percentage, of
- the sum of the Residual Value Losses for all vehicles
allocated to the Lease SUBI that were subject to closed-
end leases and were sold or otherwise disposed of after
termination or expiration of those leases during the
preceding Monthly Period minus all amounts received by
the servicer during that Monthly Period in connection
with the termination or expiration of those leases and
all other closed-end leases that were terminated or
expired during prior Monthly Periods including, without
limitation,
- sales proceeds of those vehicles, net of any
and all out-of-pocket costs and expenses
incurred by the servicer in connection with
those sales or other dispositions and any
amounts remitted to the related lessees as
required by applicable law or the related
leases and
- any and all insurance proceeds received in
connection with the occurrence of a casualty
event in respect of those vehicles
divided by
- the sum of the Stated Residual Values for all vehicles
allocated to the Lease SUBI that were subject to closed-
end leases and were sold or otherwise disposed of after
termination or expiration of those leases during the
preceding Monthly Period.
"Series 2000-1 Allocated Adjusted Aggregate Unit Balance" means
on any date the product of
- the Adjusted Aggregate Unit Balance on that date
multiplied by
<PAGE>
- the quotient of
- the Required Asset Amount
divided by the sum of
- the Required Asset Amount
plus
- the equivalent amounts for all other
series of notes.
"Series 2000-1 Invested Percentage" means with respect to any
business day the percentage equivalent of a fraction the numerator of
which is equal to the Series 2000-1 Allocated Adjusted Aggregate Unit
Balance, determined during the revolving period as of the end of the
immediately preceding business day, or, during the amortization period,
as of the end of the revolving period, and the denominator of which is
the sum of the numerators used to determine the invested percentages for
allocations for all series of notes, including all series of notes that
have been paid in full but as to which the amortization period has not
ended, as of the end of the immediately preceding business day.
"Servicer Termination Event" means one of the events described
in this prospectus under the caption "The Origination Trust and the
Servicing Agreement--The Servicing Agreement--Servicer Termination
Events".
"Servicing Agreement" means the agreement dated as of June 30,
1999 among the Origination Trust, Raven Funding and Vehicle Management
Services, as servicer, as supplemented by the supplement relating to the
Lease SUBI and the Fleet Receivable SUBI.
"Stated Residual Value" means, for any vehicle allocated to the
Lease SUBI subject to a closed-end lease, the lesser of
- the stated residual value of that vehicle established at
the time of origination of that lease in accordance with
Vehicle Management Services' origination standards and
- the Net Book Value of that vehicle.
"Telerate Page 3750" means the definition contained in the
International Swaps Derivatives Association, Inc. 1991 Interest Rate and
Currency Exchange Definitions.
"Three Month Average Charge-Off Ratio" means for any payment
date the average of the Charge-Off Ratios for that payment date and the
two preceding payment dates.
<PAGE>
"Three Month Average Delinquency Ratio" means for any payment
date the average of the Delinquency Ratios for that payment date and the
two preceding payment dates.
"Three Month Average Paid-In Advance Loss Ratio" means for any
payment date the average of the Paid-In Advance Loss Ratios for that
payment date and the two preceding payment dates.
"Three Month Average Residual Value Loss Ratio" means for any
payment date the average of the Residual Value Loss Ratios for that
payment date and the two preceding payment dates.
"Transaction Documents" means:
- the Indenture,
- the notes,
- any agreements relating to the issuance or the purchase
of any of the notes,
- any agreements relating to any credit enhancement for
any notes,
- the LLC Agreement,
- the Transfer Agreement,
- the Administration Agreement,
- the Management Agreement and
- the Origination Trust Documents.
"Transfer Agreement" means the agreement, dated as of June 30,
1999, as amended as of October 28, 1999, between Raven Funding and the
issuer pursuant to which Raven Funding transferred to the issuer the
Lease SUBI Certificate and the Fleet Receivable SUBI Certificate on June
30, 1999 and transferred or transfers all additional vehicles and the
related leases allocated to the Lease SUBI after that date.
"Transfer Termination Event" means one of the events described
in this prospectus under the caption "Security for the Series 2000-1
Notes--Transfer Agreement--Transfer Termination Events".
"Twelve Month Average Charge-Off Ratio" means for any payment
date the average of the Charge-Off Ratios for that payment date and the
eleven preceding payment dates.
"Twelve Month Average Paid-In Advance Loss Ratio" means for any
payment date the average of the Paid-In Advance Loss Ratios for that
payment date and the eleven preceding payment dates.
<PAGE>
"Twelve Month Average Residual Value Loss Ratio" means for any
payment date the average of the Residual Value Loss Ratios for that
payment date and the eleven preceding payment dates.
"Unit Balance" of any lease means the Lease Balance of that
lease, plus, in the case of a closed-end lease, the Stated Residual Value
of the vehicle subject to that lease.
"U.S. Note Owner" means any beneficial owner of a series 2000-1
note that is
- an individual who is a United States citizen or
resident,
- a corporation or partnership created or organized in or
under the laws of the United States or any political
subdivision of the United States,
- an estates whose income is subject to U.S. federal
income taxation regardless of its source,
- a trust that has validly elected to be treated as a
United States person for U.S. federal income tax
purposes or
- a trust if a United States court can exercise primary
supervision over its administration and one or more
United States persons have the authority to control all
of its substantial decisions.
"Yield Shortfall Amount" for any payment date will equal:
- the Hypothetical Yield Shortfall Amount, if the
Hypothetical Yield Shortfall Amount for that payment
date is less than 70% of the product of the Series 2000-
1 Invested Percentage multiplied by the Fleet Receivable
Amount as of that payment date (after giving effect to
any increase on that payment date) and
- otherwise, an amount equal to the product of:
- the Series 2000-1 Invested Percentage on that
payment date of the aggregate Lease Balance of
all leases allocated to the Lease SUBI as of
the last day of the preceding Monthly Period
with an actual or implicit variable finance
charge rate of less than the Minimum Yield Rate
on that payment date
multiplied by
- the amount by which
<PAGE>
- the Minimum Yield Rate for that payment
date
exceeds
- the quotient of
- the sum of the product with
respect to each lease
allocated to the Lease SUBI on
that payment date with an
actual or implicit variable
finance charge rate of less
than the Minimum Yield Rate of
the actual or implicit finance
charge rate applicable to that
lease multiplied by the Net
Book Value of the vehicle
subject to that lease as of
the last day of the
immediately preceding Monthly
Period
divided by
- the aggregate Net Book Value
of all of the vehicles subject
to all of those leases as of
the last day of the
immediately preceding Monthly
Period
multiplied by
- 50% of the weighted (on the basis of Net Book
Value of the related vehicle) average number of
months over which the Capitalized Cost of all
of the vehicles subject to those leases are
being depreciated, assuming that all scheduled
lease payments are made when scheduled and that
the lessees do not elect to convert the finance
charges applicable to those leases to a fixed
rate, as of the last day of the preceding
Monthly Period.
<PAGE>
Index to Financial Statements
Page
Greyhound Funding LLC
Independent Auditors' Report F-2
Balance Sheet as of December 31, 1999 F-3
Statement of Income for the period from June 24, 1999 (inception)
through December 31, 1999 F-4
Statement of Cash Flows for the period from June 24, 1999
(inception) through December 31, 1999 F-5
Statement of Members' Equity for the period from June 24, 1999
(inception) through December 31, 1999 F-6
Notes to the Financial Statements F-7
Unaudited Balance Sheet as of March 31, 2000 F-14
Unaudited Statement of Income for the quarter ended March 31, 2000 F-15
Unaudited Statement of Cash Flows for the quarter ended
March 31, 2000 F-16
Unaudited Statement of Members' Equity for the quarter ended
March 31, 2000 F-17
Notes to the Unaudited Financial Statements F-18
D.L. Peterson Trust
Independent Auditors' Report F-20
Balance Sheet as of December 31, 1999 F-21
Statement of Operations and Trust Equity for the period from
June 30, 1999 through December 31, 1999 F-22
Notes to the Financial Statements F-23
Unaudited Balance Sheet as of March 31, 2000 F-28
Unaudited Statement of Operations and Trust Equity for the
quarter ended March 31, 2000 F-29
Notes to the Unaudited Financial Statements F-30
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Members of
Greyhound Funding LLC
We have audited the accompanying balance sheet of Greyhound Funding LLC
(the "Company"), an affiliate of PHH Vehicle Management Services LLC, as
of December 31, 1999, and the related statements of income, members'
equity, and cash flows for the period from June 24, 1999 (inception)
through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1999,
and the results of its operations and its cash flows for the period from
June 24, 1999 (inception) through December 31, 1999 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared from the
separate records maintained by the Company and may not necessarily be
indicative of the conditions that would have existed or the results of
operations if the Company had been operated as an unaffiliated entity.
/s/ DELOITTE & TOUCHE LLP
Baltimore, Maryland
June 17, 2000
<PAGE>
GREYHOUND FUNDING LLC
BALANCE SHEET AS OF DECEMBER 31, 1999
(in thousands)
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . $93,531
Restricted cash . . . . . . . . . . . . . . . . . . . 62,168
Special unit of beneficial interest in fleet 80,000
receivables - related party . . . . . . . . . . . .
Deferred financing fees . . . . . . . . . . . . . . . 4,401
Interest rate cap . . . . . . . . . . . . . . . . . . 6,365
Special unit of beneficial interest in leases - 2,926,686
related party . . . . . . . . . . . . . . . . . . .
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $3,173,151
LIABILITIES AND MEMBERS' EQUITY
LIABILITIES:
Income taxes payable . . . . . . . . . . . . . . . $581
Deferred income taxes . . . . . . . . . . . . . . . 4,940
Accrued interest . . . . . . . . . . . . . . . . . 10,599
Due to affiliates . . . . . . . . . . . . . . . . . 42,029
Medium term notes . . . . . . . . . . . . . . . . . 1,000,000
Variable funding notes . . . . . . . . . . . . . . 1,363,187
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . 2,421,336
-----------
MEMBERS' EQUITY
Preferred membership interests . . . . . . . . . . 262,451
Common membership interest, no par value . . . . . 468,032
Retained earnings . . . . . . . . . . . . . . . . . 21,332
TOTAL MEMBERS' EQUITY . . . . . . . . . . . . . . . . 751,815
----------
TOTAL LIABILITIES AND MEMBERS' EQUITY . . . . . . . . $3,173,151
==========
See notes to financial statements.
<PAGE>
GREYHOUND FUNDING LLC
STATEMENT OF INCOME
FOR THE PERIOD FROM JUNE 24, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
(in thousands)
INCOME:
Income from investment in related party special $106,547
unit beneficial interest in leases . . . . . . . --------
EXPENSES:
Interest expense . . . . . . . . . . . . . . . . . 71,699
Service fees to related party . . . . . . . . . . . 2,609
Amortization . . . . . . . . . . . . . . . . . . . 77
---------
Total expenses . . . . . . . . . . . . . . . . . . . 74,385
---------
OPERATING INCOME . . . . . . . . . . . . . . . . . . 32,162
OTHER INCOME-Interest . . . . . . . . . . . . . . . . 4,250
---------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . 36,412
INCOME TAX PROVISION - STATE TAXES . . . . . . . . . 763
---------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $35,649
=========
See notes to financial statements.
<PAGE>
GREYHOUND FUNDING LLC
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 24, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . $35,649
Adjustments to reconcile net income to net cash
used in operating activities:
Amortization . . . . . . . . . . . . . . 77
Changes in other assets and liabilities:
Special unit of beneficial interest in
fleet receivables . . . . . . . . . . (80,000)
Accrued expenses . . . . . . . . . . . . 10,599
Restricted cash . . . . . . . . . . . . (62,168)
Income taxes payable . . . . . . . . . . 581
Deferred income taxes . . . . . . . . . 182
---------
Net cash used in operating
activities . . . . . . . . . . . . . (95,080)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Special unit of beneficial interest in leases . . . (2,926,686)
----------
Net cash used in investing activities . (2,926,686)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred financing fees . . . . . . . . (4,478)
Purchase of interest rate cap . . . . . . . . . . . (6,365)
Proceeds from issuance of preferred membership 262,451
interests . . . . . . . . . . . . . . . . . . . .
Capital contribution from common member . . . . . . 468,032
Distributions paid . . . . . . . . . . . . . . . . (14,317)
Proceeds from issuance of variable funding notes . 1,363,187
Proceeds from issuance of medium term notes . . . 1,000,000
Advances from affiliates . . . . . . . . . . . . . 46,787
--------
Net cash provided by financing activities 3,115,297
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . 93,531
<PAGE>
CASH AND CASH EQUIVALENTS, JUNE 24, 1999 (INCEPTION) --
---------
CASH AND CASH EQUIVALENTS, DECEMBER 31, 1999 . . . . $93,531
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . $61,100
=========
<PAGE>
GREYHOUND FUNDING LLC
STATEMENT OF MEMBERS' EQUITY FOR THE PERIOD FROM JUNE 24, 1999
(INCEPTION) THROUGH DECEMBER 31, 1999 (in thousands)
<TABLE>
Preferred Common
Membership Membership Retained Total Members'
Interest Interest Earnings Equity
---------- ---------- --------- --------------
<C> <S> <S> <S> <S>
BALANCE, June 24, 1999 . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
(inception)
Net income . . . . . . . . . . . . . . . . . . . . . . -- -- 35,649 35,649
Issuance of common . . . . . . . . . . . . . . . . . .
membership interest . . . . . . . . . . . . . . . . . -- 86,500 -- 86,500
Issuance of preferred . . . . . . . . . . . . . . . . .
membership interest . . . . . . . . . . . . . . . . . 262,451 -- -- 262,451
Capital contribution . . . . . . . . . . . . . . . . . -- 381,532 -- 381,532
Preferred membership distributions . . . . . . . . . . -- -- (7,839) (7,839)
Common membership distributions . . . . . . . . . . . . -- -- (6,478) (6,478)
--------- --------- --------- ---------
BALANCE, December 31, 1999 . . . . . . . . . . . . . . $262,451 $468,032 $21,332 $751,815
========= ========= ========= =========
</TABLE>
See notes to financial statements.
<PAGE>
GREYHOUND FUNDING LLC
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Greyhound Funding LLC ("Greyhound" or "the Company"), is a
special purpose limited liability company organized under the
laws of the State of Delaware. The sole common member of
Greyhound is Raven Funding LLC ("Raven"), which itself is a
special purpose limited liability company established under the
laws of the State of Delaware. The sole member of Raven is PHH
Vehicle Management Services LLC ("PHH"), a limited liability
company and a wholly-owned subsidiary of Avis Group Holdings,
Inc. (formerly Avis Rent A Car, Inc.) ("Avis").
Greyhound was formed for the purpose of issuing indebtedness,
issuing preferred membership interests, acquiring a special unit
of beneficial interest in certain leases (the "Lease SUBI"), and
acquiring a portion of a special unit of beneficial interest in
certain fleet service receivables (the "Fleet Receivable SUBI")
owned by D.L. Peterson Trust ("DLPT"). The Lease SUBI is a
beneficial ownership interest in the leases, vehicles and
paid-in-advance vehicles owned by DLPT. DLPT is a statutory
business trust established by PHH in order to administer the
titling of the vehicles in connection with the financing and
transfer of vehicles subject to leases. Greyhound owns a
certificate representing the Lease SUBI (the "Lease SUBI
Certificate") and a certificate representing an interest in the
Fleet Receivable SUBI in an amount up to $80 million (the "Fleet
Receivable SUBI Certificate"). PHH acts as servicer of the
assets held by the DLPT including the assets allocated to the
Lease SUBI and the Fleet Receivable SUBI. In its role as
servicer, PHH maintains all property and equipment and employees
required to perform said servicing activities. Raven Funding
contributed the Fleet Receivable SUBI Certificate and the Lease
SUBI Certificate to Greyhound.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Estimates -The preparation of financial statements in
accordance with generally accepted accounting principles
requires management to make estimates and assumptions that
affect reported amounts and related disclosures. Actual results
could differ from those estimates.
Cash and Cash Equivalents -Represents lease payments collected
from the Company's customers by one of the Company's lenders in
connection with the Company's asset backed financing structure
(see Note 6). Cash collected during the month by the lender, in
some cases, net of vehicle purchases, is settled with the
Company in the early part of the following month. The Company
<PAGE>
considers all investments purchased with an original maturity of
three months or less to be cash equivalents.
Restricted Cash -Restricted cash includes cash that is not
readily available for normal Company disbursements. Certain
amounts have been set aside as required by the Company's debt
covenants (see Note 3).
Revenue -Income from investment in related party special unit of
beneficial interest in leases is recognized as DLPT recognizes
income on its lease portfolio. The majority of leases within
its lease portfolio are operating leases (see Note 5) and
therefore Lease SUBI income represents the monthly lease payment
from the lessee minus the depreciation on the related vehicle.
Leases accounted for using the direct finance method have income
recognized monthly based on the accretion of the unearned income
recorded at the inception of the lease and accreted over the
lease term.
Deferred Financing Fees -Deferred financing fees are costs
incurred in connection with obtaining debt. The amount is being
amortized over the related term of the debt, eleven years.
New Accounting Pronouncement -The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," in June 1998, as amended by SFAS No. 137. This
Standard establishes accounting and reporting standards for
derivative instruments including certain derivative instruments
embedded in other contracts, and for hedging activities. It
requires a company to recognize all derivatives as either assets
or liabilities in the balance sheet and to measure those
instruments at fair value. This standard is effective for
fiscal years beginning after June 15, 2000. As of December 31,
1999, the Company had not adopted this Standard. In addition,
management has not completed its assessment of the effect on the
Company's financial statements resulting from the adoption of
SFAS No. 133.
3. RESTRICTED CASH
At December 31, 1999 restricted cash includes two escrow
accounts in the aggregate amount of $62,168,000 as required
under the Company's debt agreements to provide additional credit
enhancement on the Company's medium term notes and variable
funding notes (see Note 6).
4. SPECIAL UNIT OF BENEFICIAL INTEREST IN FLEET RECEIVABLES
The Fleet Receivable SUBI Certificate represents the beneficial
interest in up to $80 million of the Fleet Receivables acquired
by Raven from PHH and contributed by Raven to DLPT each month.
The fleet receivables include customer payment obligations arising
<PAGE>
from fuel card programs, vehicle maintenance charges and accident
management services. Raven owns a certificate representing any
amount of Fleet Receivables over $80 million. It has not been
assigned to the Company.
As of December 31, 1999, accounts receivable in the financial
statements of DLPT consisted of the following (in thousands):
Amounts billed $119,258
Allowance for doubtful accounts (2,398)
---------
Accounts receivable, net $116,860
=========
Allowance for Doubtful Accounts -An allowance for doubtful
accounts is generally established during the period in which
receivables are recorded. The allowance is maintained at a
level deemed appropriate based on historical experience and
other factors, affecting collectibility. The allowance is
maintained on DLPT and is part of the Fleet Receivable SUBI.
5. SPECIAL UNIT OF BENEFICIAL INTEREST IN LEASES
The Lease SUBI Certificate is issued by DLPT to Raven and then
transferred to Greyhound. The Lease SUBI Certificate represents
a beneficial interest in the leases, vehicles subject to those
leases and paid-in advance vehicles (collectively "SUBI
Assets"). The carrying amount of the Lease SUBI Certificate on
the Company's financial statements is the same as the book value
of the SUBI Assets in DLPT's financial statements.
The following information describes the leases maintained by
DLPT which are the underlying assets of the Lease SUBI, and
summarizes the accounting policies used by DLPT which are in
accordance with generally accepted accounting principles.
DLPT primarily leases its vehicles under three standard
arrangements: open-end operating leases, closed-end operating
leases and open-end finance leases (direct financing leases).
These leases are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 13, "Accounting for
Leases." Each lease is either classified as an operating lease
or direct financing lease, as defined.
Open-end Operating Leases -Under these leases, the minimum lease
term is 12 months with a month to month renewal thereafter. In
addition, resale of the vehicles upon termination of the lease
is for the account of the lessee except for a minimum residual
value, which DLPT guarantees. DLPT guarantees 16% of the fair
market value (defined as the vehicle's capitalized cost if it is
sold during the period from the beginning of the thirteenth
through the end of the twenty-fourth month of its rental term)
<PAGE>
of the vehicles at the time of sale. If the vehicle is sold
anytime after the twenty-fourth month of its rental term, the
fair market value is the fair market value of the vehicle at the
beginning of the monthly renewal period immediately preceding
the date of sale. The guarantee is adjusted for any excess wear
and tear or any excess mileage.
Closed-end Operating Leases -Under these leases, the minimum
lease term is 18 months or longer; however, 24 and 36 month
lease terms are the most prevalent. These leases are cancelable
under certain conditions. The residual values for the
closed-end leases are included in the investment in leases and
leased vehicles. Residual value estimates are made utilizing
third party estimates and PHH's internal expertise. Resale of
the vehicles upon termination is for the account of the lessor.
At December 31, 1999, the net investment in leases and leased
vehicles for all operating leases was approximately $2.8
billion. In addition, a reserve for residual risk on its
closed-end operating lease portfolio was approximately $771,000.
The amount of reserve is determined by actual historical
experience and management's best estimate based on the specific
models and age of certain vehicles within the lease portfolio.
Open-end Direct Financing Leases -Under these leases, the
minimum lease term is 12 months with a month to month renewal
thereafter. In addition, resale of the vehicles upon
termination of the lease is for the account of the lessee.
At December 31, 1999, the net investment in leases and leased
vehicles for direct financing leases was approximately $129
million.
Paid-in Advance Vehicles -These represent disbursements for
vehicles that have not yet been transferred to the investment in
leases and leased vehicles balance. These vehicles will
ultimately become eligible leases under the Lease SUBI.
Fleet Management Services -Revenues from fleet management
services other than leasing are recognized over the period in
which services are provided and the related expenses are
incurred.
At December 31, 1999, future minimum lease payments to be
received on DLPT's operating and finance leases are as follows
(in thousands):
<PAGE>
<TABLE>
Direct
Operating Financing
Leases Leases Total
--------- ---------- -------
<C> <S> <S> <S>
2000 $ 983,166 $ 46,890 $ 1,030,056
2001 814,833 38,559 853,392
2002 548,563 26,197 574,760
2003 268,745 11,911 280,656
2004 92,606 3,551 96,157
Thereafter 90,356 2,080 92,436
--------- ---------- -------
Total $2,798,269 $ 129,188 $ 2,927,457
</TABLE>
Net Investment in Leases -A summary of the net investment in
leases recorded by DLPT at December 31, 1999 consists of the
following (in thousands):
Vehicles under open-end operating leases $2,982,218
Vehicles under closed-end operating leases 236,483
Vehicles held for sale 23,529
---------
3,242,230
Less accumulated depreciation (444,732)
---------
2,797,498
Receivables under direct financing leases 129,188
---------
Total $2,926,686
6. DEBT
The variable funding notes provide for a maximum outstanding
amount of $1.75 billion (the Series 1999-3 notes) to a group of
multi-seller commercial paper conduits, which is renewable
annually. At December 31, 1999, $1.363 billion is outstanding
on these notes.
Medium term notes include two classes of floating rate
asset-backed notes (the Series 1999-2 floating rate asset-backed
notes), Class A-1 notes, which total $550 million and Class A-2
notes, which total $450 million. Both classes of notes have an
interest rate, which is reset monthly at LIBOR plus 32 basis
points for the Class A-1 notes and 35 basis points for the Class
A-2 notes.
The Class A-1 notes commence amortizing on the earlier of March
2001 or the occurrence of an amortization event as defined in
the debt agreement and have a final stated maturity of October
2006. The Class A-2 notes commence amortizing on the earlier of
when the Class A-1 notes are repaid in full or the occurrence of
an amortization event. The Class A-2 notes have a final stated
maturity of October 2011. Actual repayments of principal are
based on cash flows available from the Lease SUBI.
<PAGE>
The blended interest rate in effect at December 31, 1999 for
asset-backed notes is approximately 6.71%. Interest is payable
monthly.
Estimated repayments of the debt (determined as of December 31,
1999 and assuming that (i) the Series 1999-3 notes are extended
annually and (ii) the amounts paid by the lessees under DLPT's
leases in each period are equal to the minimum lease payments
due under the DLPT leases in existence on December 31, 1999) are
set forth in thousands:
Year
2000 $ --
2001 161,269
2002 165,864
2003 116,709
2004 23,843
Thereafter 1,895,502
---------
Total $2,363,187
Credit enhancement for each of the Series 1999-2 floating rate
asset-backed notes and the variable funding notes is provided in
the form of (a) overcollateralization provided by the excess of
the amount of the Company's assets allocated to each series of
notes over the principal amount of that series of notes, (b) the
Fleet Receivable SUBI Certificate and amounts payable to the
holder thereof, (c) amounts, if any, on deposit in a reserve
account and (d) amounts on deposit in a yield supplement
account.
7. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has derivative financial instruments on hand at
December 31, 1999 that are sensitive to changes in its debt
obligations. To reduce the risk of interest fluctuations under
its asset based debt agreement, the Company has entered into an
interest rate cap with a duration of 10 years. The interest
rate cap, which is being amortized straight-line over ten years,
has a notional value of approximately $673 million, a carrying
value of approximately $6.4 million and a fair value of
approximately $7.5 million at December 31, 1999 (see Note 9).
8. PREFERRED MEMBERSHIP INTEREST
The Company has issued Series 1999-2 Senior Preferred Membership
Interests ("Series 1999-2 PMI's") of which $93.1 million are
outstanding at December 31, 1999. The holders of the Series
1999-2 PMI's are entitled to receive dividends based upon the
funding costs of the multi-seller commercial paper conduits,
plus a program fee of 0.70% per annum. The dividend periods
correspond to the same interest periods as the Series 1999-2
<PAGE>
floating rate asset-backed notes. Dividends on the Series
1999-2 PMI's must be declared and paid on each dividend payment
date therefor to the extent that, on such date, the Company has
funds legally available for the payment of such dividends based
on the covenants specified in the Company's LLC agreement.
The Company has issued Series 1999-3 Senior Preferred Membership
Interests ("Series 1999-3 PMI's") of which $169.4 million are
outstanding at December 31, 1999. The holders of the Series
1999-3 PMI's are entitled to receive dividends at a rate equal
to one-month LIBOR plus 170 basis points. The dividend periods
correspond to the same interest periods as the variable funding
notes. Dividends on the Series 1999-3 PMI's must be declared
and paid on each dividend payment date therefor to the extent
that on such date, the Company has funds legally available for
the payment of such dividends based on the covenants specified
in the Company's LLC agreement.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company
in estimating fair value disclosures for material financial
instruments. The fair values of the financial instruments
presented may not be indicative of their future values.
Variable Funding Notes -The carrying amount of the variable
funding notes approximates fair value.
Medium Term Notes -The fair value was determined based on quoted
market prices for similar issues or on current rates available
to the Company for debt on similar terms.
At December 31, 1999, the carrying amounts and fair value of the
Company's financial instruments are as follows (in thousands):
<TABLE>
Estimated
Notional Carrying Fair
Amount Amount Value
--------- -------- ------------
<C> <S> <S> <S>
Cash $ -- $ 93,531 $ 93,531
Restricted cash -- 62,168 62,168
Interest rate cap 672,841 6,365 7,539
Fleet Receivable SUBI Certificate -- 80,000 80,000
Lease SUBI Certificate -- 2,926,686 2,926,686
Debt - Variable funding notes -- 1,363,187 1,363,187
- Medium term notes -- 1,000,000 1,000,000
Due to affiliates -- 46,787 46,787
</TABLE>
<PAGE>
10. RELATED PARTY TRANSACTIONS
Due to affiliates, net at December 31, 1999 consist of
non-interest bearing advances due to Raven and Hunt Valley LLC
and advances due from Avis. Hunt Valley LLC is a special
purpose limited liability company whose sole common member is
Raven. During 1999, Hunt Valley purchased the Series 1999-3
PMIs from Greyhound. Non interest bearing advances represent
intercompany transactions relating primarily to leasing
billings, cash collections, cash transfers and servicing fees.
Expense items of the Company include a servicing fee paid to PHH
for the servicing of the lease portfolio which is represented by
the Lease SUBI. Services provided to the Company include all
administrative support services, accounting, management and
required personnel to conduct its business.
11. NON-CASH FINANCING ACTIVITIES
During October 1999, the Company refinanced its Series 1999-1
variable funding notes of $2,363,403 with the issuance of the
debt instruments discussed in Footnote 6. Additionally, in
connection with this refinancing the Company redeemed its Series
1999-1 Preferred Membership Interests with the PMI's discussed
in Note 8.
12. FEDERAL AND STATE INCOME TAXES
The Company is not subject to federal income taxes. Instead,
each member reports their distributive share of the Company's
profit on their income tax return. Certain states in which the
Company conducts business impose state income taxes or franchise
taxes on the Company. The state tax provision below is
calculated based on the applicable statutory tax rates in the
various states.
The Company determines its deferred tax provision under the
liability method, whereby deferred tax assets and liabilities
are recognized for the expected tax consequences of temporary
differences between the tax bases of assets and liabilities, and
their reported amounts using presently enacted tax rates.
Following are the components of the state tax provision (in
thousands):
Current $581
Deferred 182
---
Total $763
---
The deferred income tax liability results solely from the
difference in the depreciation methods used for income tax
reporting and for financial statement reporting.
********
<PAGE>
GREYHOUND FUNDING LLC
UNAUDITED BALANCE SHEET AS OF MARCH 31, 2000
(in thousands)
<TABLE>
ASSETS
<C> <S>
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 107,563
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,002
Special unit of beneficial interest in fleet receivables - related party . . . . . . . . . . . 80,000
Deferred financing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,565
Interest rate cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,198
Special unit of beneficial interest in leases - related party . . . . . . . . . . . . . . . . . 3,009,635
---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,269,963
LIABILITIES AND MEMBERS' EQUITY
LIABILITIES:
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 943
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,031
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,640
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,457
Medium term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
Variable funding notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,428,187
---------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,505,258
MEMBERS' EQUITY
Preferred membership interests . . . . . . . . . . . . . . . . . . . . . . . . . . 262,451
Common membership interest, no par value . . . . . . . . . . . . . . . . . . . . . 468,032
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,222
---------
TOTAL MEMBERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 764,705
---------
TOTAL LIABILITIES AND MEMBERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,269,963
</TABLE>
See notes to the unaudited financial statements.
<PAGE>
GREYHOUND FUNDING LLC
UNAUDITED STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 2000
(in thousands)
INCOME:
Income from investment in related party special unit beneficial
interest in leases $ 55,585
EXPENSES:
Interest expense . . . . . . . . . . . . . . . . . . . 38,607
Service fees to related party . . . . . . . . . . . . 1,505
Amortization . . . . . . . . . . . . . . . . . . . . . 303
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 40,415
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . 15,170
OTHER INCOME-Interest . . . . . . . . . . . . . . . . . . . . . . . 2,532
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . 17,702
INCOME TAX PROVISION - STATE TAXES . . . . . . . . . . . . . . . . 454
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 17,248
See notes to the unaudited financial statements.
<PAGE>
GREYHOUND FUNDING LLC
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 2000
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . .$ 17,248
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization . . . . . . . . . . . . . . . . . . . . 303
Changes in other assets and liabilities:
Restricted cash . . . . . . . . . . . . . . . . . . . 166
Accrued interest . . . . . . . . . . . . . . . . . . 41
Other assets . . . . . . . . . . . . . . . . . . . . (300)
Income taxes payable . . . . . . . . . . . . . . . . 362
Deferred income taxes . . . . . . . . . . . . . . . . 91
Net cash provided by operating activities . . . . 17,911
CASH FLOWS USED IN INVESTING ACTIVITIES:
Special unit of beneficial interest in leases . . . . . . (82,949)
Net cash used in investing activities . . . . . . (82,949)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid . . . . . . . . . . . . . . . . . . . . (4,358)
Proceeds from issuance of variable funding notes . . . . . 65,000
Advances from affiliates . . . . . . . . . . . . . . . . . 18,428
Net cash provided by financing activities . . . . 79,070
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . 14,032
CASH AND CASH EQUIVALENTS, DECEMBER 31, 1999 . . . . . . . . . . . 93,531
CASH AND CASH EQUIVALENTS, MARCH 31, 2000 . . . . . . . . . . . . .$ 107,563
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . .$ 38,957
See notes to the unaudited financial statements.
<PAGE>
GREYHOUND FUNDING LLC
UNAUDITED STATEMENT OF MEMBERS' EQUITY
FOR THE QUARTER ENDED MARCH 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Preferred Common Total
Membership Membership Retained Members'
Interest Interest Earnings Equity
----------- ---------- -------- --------
<S> <C> <C> <C>
BALANCE, December 31, 1999 . . . . . . . . . . . . . . $ 262,451 $ 468,032 $ 21,332 $751,815
Net income . . . . . . . . . . . . . . . . . . . . . . -- -- 17,248 17,248
Preferred membership distributions . . . . . . . . . . -- -- (4,358) (4,358)
BALANCE, March 31, 2000 . . . . . . . . . . . . . . . . $ 262,451 $ 468,032 $ 34,222 $764,705
</TABLE>
See notes to the unaudited financial statements.
<PAGE>
GREYHOUND FUNDING LLC
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. ORGANIZATION
Greyhound Funding LLC ("Greyhound" or "the Company"), is a
special purpose limited liability company organized under the
laws of the State of Delaware. The sole common member of
Greyhound is Raven Funding LLC ("Raven"), which itself is a
special purpose limited liability company established under the
laws of the State of Delaware. The sole member of Raven is PHH
Vehicle Management Services LLC ("PHH"), a limited liability
company and a wholly-owned subsidiary of Avis Group Holdings,
Inc. (formerly Avis Rent A Car, Inc.) ("Avis").
Greyhound was formed for the purpose of issuing indebtedness,
issuing preferred membership interests, acquiring a special unit
of beneficial interest in certain leases (the "Lease SUBI"), and
acquiring a portion of a special unit of beneficial interest in
certain fleet service receivables (the "Fleet Receivable SUBI").
The Lease SUBI is a beneficial ownership interest in the leases,
vehicles and paid-in-advance vehicles owned by D.L. Peterson
Trust ("DLPT"). DLPT is a statutory business trust established
by PHH in order to administer the titling of the vehicles in
connection with the financing and transfer of vehicles subject
to leases. Greyhound owns a certificate representing the Lease
SUBI (the "Lease SUBI Certificate") and a certificate
representing an interest in the Fleet Receivable SUBI in an
amount up to $80 million (the "Fleet Receivable SUBI
Certificate"). PHH acts as servicer of the assets held by the
DLPT including the assets allocated to the Lease SUBI and the
Fleet Receivable SUBI. In its role as servicer, PHH maintains
all property and equipment and employees required to perform
said servicing activities. Raven Funding contributed the Fleet
Receivable SUBI Certificate and the Lease SUBI Certificate to
Greyhound.
The accompanying notes to the unaudited financial statements
should be read in conjunction with the audited financial
statements of Greyhound for the period from June 24, 1999
(inception) to December 31, 1999 also included in this
prospectus.
In the opinion of management all adjustments necessary for a
fair presentation of the financial position and results of
operations, as of and for the interim period, have been included
2. RESTRICTED CASH
At March 31, 2000 restricted cash includes two escrow accounts
in the aggregate amount of $62,002 as required under the
Company's debt agreements to provide additional credit
enhancement on the Company's medium term notes and variable
funding notes (see Note 4).
<PAGE>
3. SPECIAL UNIT OF BENEFICIAL INTEREST IN FLEET RECEIVABLES
The Fleet Receivable SUBI Certificate represents the beneficial
interest in up to $80 million of the Fleet Receivables acquired
by Raven from PHH and contributed by Raven to DLPT each month.
The Fleet Receivables include customer payment obligations arising
from fuel card programs, vehicle maintenance charges and accident
management services. Raven owns a certificate representing any
amount of Fleet Receivables over $80 million. It has not been
assigned to the Company.
As of March 31, 2000, accounts receivable in the financial
statements of DLPT consisted of the following:
Amounts billed $120,797
Allowance for doubtful accounts (2,515)
Accounts receivable, net $118,282
Allowance for Doubtful Accounts -An allowance for doubtful
accounts is generally established during the period in which
receivables are recorded. The allowance is maintained at a
level deemed appropriate based on historical experience and
other factors, affecting collectibility. The allowance is
maintained on DLPT and is part of the Fleet Receivable SUBI.
4. DEBT
The variable funding notes provide for a maximum outstanding
amount of $1.75 billion (the Series 1999-3 notes) to a group of
multi-seller commercial paper conduits which is renewable
annually.
Medium term notes include two classes of floating rate
asset-backed notes (the Series 1999-2 floating rate asset-backed
notes), Class A-1 notes, which total $550 million and Class A-2
notes, which total $450 million. Both classes of notes have an
interest rate, which is reset monthly at LIBOR, plus 32 basis
points for the Class A-1 notes and 35 basis points for the Class
A-2 notes.
The Class A-1 notes commence amortizing in March 2001 and have a
final stated maturity of October 2006. The Class A-2 notes
commence amortizing when the Class A-1 notes are repaid in full.
The Class A-2 notes have a final stated maturity of October
2011. Actual repayments of principal are based on cash flows
available from the Lease SUBI.
Credit enhancement for each of the Series 1999-2 floating rate
asset-backed notes and the variable funding notes is provided in
the form of (a) overcollateralization provided by the excess of
the amount of the Company's assets allocated to each series of
notes over the principal amount of that series of notes. (b) the
Fleet Receivable SUBI Certificate and amounts payable to the
holder thereof, (c) amounts, if any, on deposit in a reserve
account and (d) amounts on deposit in a yield supplement
account.
<PAGE>
The blended interest rate in effect as of March 31, 2000 for the
asset-backed notes is approximately 6.38%. Interest is payable
monthly.
5. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has derivative financial instruments on hand at
March 31, 2000 that are sensitive to changes in its debt
obligations. To reduce the risk of interest fluctuations under
its asset based debt agreement, the Company has entered into an
interest rate cap with a duration of 10 years. The interest
rate cap has a notional value of approximately $673 million, a
carrying value of approximately $6.2 million and a fair value of
approximately $7.5 million at March 31, 2000.
6. RELATED PARTY TRANSACTIONS
Due to affiliates, net at March 31, 2000 consist of non-interest
bearing advances due to Raven and Hunt Valley LLC and advances
due from Avis. Hunt Valley LLC is a special purpose limited
liability company whose sole common member is Raven. During
1999, Hunt Valley purchased the Series 1999-3 PMIs from
Greyhound. Non interest bearing advances represent intercompany
transactions relating primarily to leasing billings, cash
collections, cash transfers and servicing fees.
Expense items of the Company includes a servicing fee paid to
PHH for the servicing of the lease portfolio which is
represented by the Lease SUBI. Services provided to the Company
include all administrative support services, accounting,
management and required personnel to conduct its business.
********
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees of D. L. Peterson Trust
We have audited the accompanying balance sheet of D. L. Peterson Trust
(the "Trust"), an affiliate of PHH Vehicle Management Services, LLC, as
of December 31, 1999, and the related statement of operations and trust
equity for the period from June 30, 1999 through December 31, 1999.
These financial statements are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Trust as of December 31, 1999,
and the results of its operations for the period from June 30, 1999
through December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared from the
separate records maintained by the Trust and may not necessarily be
indicative of the conditions that would have existed or the results of
operations if the Trust had been operated as an unaffiliated entity.
/s/ DELOITTE & TOUCHE LLP
Baltimore, Maryland
January 26, 2000
<PAGE>
D. L. PETERSON TRUST
BALANCE SHEET AS OF DECEMBER 31, 1999
(in thousands)
ASSETS
Net investment in leases and leased vehicles:
Operating leases . . . . . . . . . . . . . . . . . . . . . . $ 2,797,498
Direct finance leases . . . . . . . . . . . . . . . . . . . . 129,188
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 2,926,686
LIABILITIES AND TRUST EQUITY
LIABILITIES:
Liability under special unit of beneficial
interest in leases - related party . . . . . . . . . . . . . $ 2,926,686
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 2,926,686
TRUST EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . --
TOTAL LIABILITIES AND TRUST EQUITY . . . . . . . . . . . . . . $ 2,926,686
See notes to financial statements.
<PAGE>
D. L. PETERSON TRUST
STATEMENT OF OPERATIONS AND TRUST EQUITY
FOR THE PERIOD FROM JUNE 30, 1999 THROUGH DECEMBER 31, 1999(in thousands)
REVENUE:
Leasing revenue . . . . . . . . . . . . . . . . . . . . . . $ 565,096
EXPENSES:
Depreciation on leased vehicles . . . . . . . . . . . . . . 458,549
Interest on special unit of beneficial interest
in leases - related party . . . . . . . . . . . . . . . . . 106,547
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 565,096
Net income . . . . . . . . . . . . . . . . . . . . . . . . . --
Trust equity, June 30, 1999 . . . . . . . . . . . . . . . . . --
Trust equity, December 31, 1999 . . . . . . . . . . . . . . . $ --
See notes to financial statements.
<PAGE>
D. L. PETERSON TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
D. L. Peterson Trust ("DLPT") was originally established by PHH
Vehicle Management Services, LLC ("PHH") as a Maryland common law
trust and was reconstituted on June 30, 1999 as a Delaware
statutory business trust. DLPT is organized under Chapter 38 of
the Delaware Business Trust Act and its trustees are PHH and
Wilmington Trust Company. DLPT was established to hold title to
vehicles and be the lessor in vehicle leases, which are subject
to various securitizations. DLPT reduces the costs and
administrative burden with securitizations by eliminating the
time and expense of retitling vehicles upon transfer assignments
of ownership of the vehicles and security.
DLPT issued a certificate (the "Lease SUBI Certificate")
representing a special unit of beneficial interest in certain
leases (the "Lease SUBI") and two certificates representing a
special unit of beneficial interest in certain fleet service
receivables (the "Fleet Receivable SUBI") to Raven Funding LLC
("Raven"). The Lease SUBI represents a beneficial ownership in
the leases, vehicles and paid-in-advance vehicles owned by DLPT.
One of the certificates representing an interest in the Fleet
Receivable SUBI represents an amount up to $80 million (the
"Fleet Receivable SUBI Certificate") and the other certificate
representing an interest in the Fleet Receivable SUBI represents
the amount of fleet service receivables in excess of $80 million
(the "Excess Fleet Receivable SUBI Certificate"). DLPT also
issued to Raven a certificate (the "UTI Certificate")
representing beneficial ownership in all assets of DLPT not
allocated to the Lease SUBI or the Fleet Receivable SUBI (the
"UTI"). Raven transferred the Lease SUBI Certificate and the
Fleet Receivable SUBI Certificate to Greyhound Funding LLC.
Raven retained the Excess Fleet Receivable SUBI Certificate and
the UTI Certificate. As of December 31, 1999, no assets were
assigned to the UTI.
Raven is a special purpose limited liability company established
under the laws of the State of Delaware. The sole member of
Raven is PHH, a wholly-owned subsidiary of Avis Group Holdings,
Inc. ("Avis"). The business activities of Raven are limited
primarily to acting as the successor settler and initial
beneficiary of DLPT. Greyhound Funding LLC ("Greyhound"), is a
special purpose limited liability company organized under the
laws of the State of Delaware. The sole common member of
Greyhound is Raven.
Greyhound was formed for the purpose of issuing indebtedness,
issuing preferred membership interests, acquiring the Lease SUBI
Certificate, and acquiring the Fleet Receivable SUBI Certificate.
PHH acts as servicer of the assets held by the DLPT including the
assets allocated to the Lease SUBI and the Fleet Receivable SUBI.
In its role as servicer, PHH will maintain all property and
equipment and employees required to perform said servicing
activities.
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Estimates -The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts and related disclosures. Actual results could differ
from those estimates.
Cash and Cash Equivalents -All transactions of DLPT are
considered non-cash activities, and accordingly no statement of
cash flows is presented in the accompanying financial statements.
PHH contributed net investment in leases and leased vehicles to
DLPT having a value of approximately $2.9 billion during 1999,
which were subsequently assigned to Raven.
Fair Value of Financial Instruments -The fair value of net
investments in leases and leased vehicles and the Lease SUBI
approximate their carrying value as these instruments re-price at
current market rates.
Revenue and Expenses -The leased assets owned by DLPT are leased
under three standard arrangements: open-end operating leases,
closed-end operating leases or open-end finance leases (direct
financing leases). These leases are accounted for in accordance
with Statement of Financial Accounting Standards No. 13,
"Accounting for Leases" ("SFAS 13"). Each lease is classified as
either an operating lease or direct financing lease.
DLPT records the cost of the leased vehicle as an "investment in
leases and leased vehicles." Vehicles are depreciated using the
straight-line method over the expected lease term. The lease
terms vary as discussed in Note 5. Amounts charged to the
lessees for interest on the unrecovered investment are credited
to income on a level yield method, which approximates the
contractual terms. Lease revenues are recognized based on
rentals.
The open-end operating leases provide that the resale of the
vehicles upon termination of the lease are for the account of the
lessee, except for a minimum residual value which DLPT has
guaranteed. DLPT guarantees 16% of the original cost of the unit
for the first 24 months of the lease and then 16% of the fair
market value of the unit at the inception of the month to month
renewals thereafter.
The closed-end operating leases provide that the resale of the
vehicles upon termination of the lease is for the account of
DLPT. The residual values for the closed-end leases are included
in the leased vehicle investment. Residual value estimates are
made utilizing third party estimates and PHH's expertise.
The open-end finance leases provide that the resale of the
vehicles upon termination of the lease are for the account of the
lessee.
Income Taxes -DLPT is not an entity subject to federal or state
income taxes. Accordingly, no taxes are provided on its income
as it is passed through to the holders of beneficial interests in
DLPT.
<PAGE>
New Accounting Pronouncement -The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," in June 1998, as amended by SFAS No. 137. This
Standard establishes accounting and reporting standards for
derivative instruments including certain derivative instruments
embedded in other contracts, and for hedging activities. It
requires a company to recognize all derivatives as either assets
or liabilities in the balance sheet and to measure those
instruments at fair value. This standard is effective for fiscal
years beginning after June 15, 2000. As of December 31, 1999,
DLPT had not adopted this Standard. In addition, management
believes that the adoption of SFAS No. 133 is not expected to
have any impact on DLPT's financial statements.
3. SPECIAL UNIT OF BENEFICIAL INTEREST IN FLEET RECEIVABLES
The Fleet Receivable SUBI represents the beneficial interest in
all of the Fleet Receivables acquired by Raven from PHH and
contributed by Raven to DLPT. The fleet receivables include
customer payment obligations arising from fuel card programs,
vehicle maintenance charges, and accident management services.
DLPT issued the Fleet Receivable SUBI Certificate and the Excess
Fleet Receivable SUBI Certificate to Raven. The Fleet Receivable
SUBI Certificate is capped at $80 million. The remaining accounts
receivable balance is represented by the Excess Fleet Receivable
SUBI Certificate.
As of December 31, 1999, accounts receivable consisted of the
following (in thousands):
Amounts billed $119,258
Allowance for doubtful accounts (2,398)
116,860
Assignments under Fleet Receivable SUBI (80,000)
Assignments under Excess Fleet
Receivable SUBI (36,860)
Net receivables $ --
Allowance for Doubtful Accounts -An allowance for doubtful
accounts is generally established during the period in which
receivables are recorded. The allowance is maintained at a
level deemed appropriate based on historical experience and
other factors affecting collectibility.
4. SPECIAL UNIT OF BENEFICIAL INTEREST IN LEASES
The Lease SUBI Certificate represents a beneficial interest in
the leases, vehicles subject to those leases and paid-in advance
vehicles (collectively "SUBI Assets"). The Lease SUBI
Certificate is issued by DLPT to Raven and then transferred to
Greyhound. In accordance with the provisions of SFAS 13,
obligations under the Lease SUBI Certificate are reflected as
borrowings in the accompanying balance sheet, and distributions
under the Lease SUBI Certificate are reflected as interest
expense in the accompanying statement of operations.
<PAGE>
5. NET INVESTMENT IN LEASES AND LEASED VEHICLES
DLPT offers primarily three leasing arrangements to its
customers. These arrangements are:
Open-end Operating Leases -Under these leases, the
minimum lease term is 12 months with a month to month
renewal thereafter. In addition, resale of the vehicles
upon termination of the lease is for the account of the
lessee except for a minimum residual value, which DLPT
guarantees. DLPT guarantees 16% of the original cost of
the unit for the first 24 months of the lease and then
16% of fair market value of the unit of inception of the
month to month renewal, thereafter. The guarantee is
adjusted for any excess wear and tear or any excess
mileage. At December 31, 1999, the original cost and
accumulated depreciation of vehicles under these leases
(in thousands) was $2,982,218 and $390,257,
respectively.
Closed-end Operating Leases -Under these leases, the
minimum lease term is 18 months or longer; however, 24
and 36 month lease terms are the most prevalent. These
leases are cancelable under certain conditions. The
residual values for the closed-end leases are included
in the investment in leases and leased vehicles.
Residual value estimates are made utilizing third party
estimates and PHH's expertise. Resale of the vehicles
upon termination is for the account of the lessor. At
December 31, 1999, the original cost and accumulated
depreciation of vehicles under these leases (in
thousands) was $236,483 and $30,946, respectively.
Open-end Direct Financing Leases -Under these leases,
the minimum lease term is 12 months with a month to
month renewal thereafter. In addition, resale of the
vehicles upon termination of the lease is for the
account of the lessee.
Paid-in Advance Vehicles -These represent disbursements for
vehicles that have not yet been transferred to the investment in
leases and leased vehicles balance. These vehicles will
ultimately become eligible leases under the Lease SUBI when they
are delivered to the ultimate customer.
Fleet Management Services -Revenues from Fleet Management
Services other than leasing are recognized over the period in
which services are provided and the related expenses are
incurred.
At December 31, 1999, future minimum lease payments to be
received on DLPT's operating and finance leases are as follows
(in thousands):
<PAGE>
Direct
Operating Financing
Leases Leases Total
---------- --------- -----
2000 $ 983,166 $ 46,890 $ 1,030,056
2001 814,833 38,559 853,392
2002 548,563 26,197 574,760
2003 268,745 11,911 280,656
2004 92,606 3,551 96,157
Thereafter 90,356 2,080 92,436
Total $ 2,798,269 $ 129,188 $ 2,927,457
At December 31, 1999 the net investment in leases and leased
vehicles consisted of the following (in thousands):
Vehicles under open-end operating leases $2,982,218
Vehicles under closed-end operating leases 236,483
(including reserve for residual values of $3,133)
Vehicles held for sale 23,529
3,242,230
Less accumulated depreciation (444,732)
2,797,498
Receivables under direct financing leases 129,188
Total $2,926,686
For the period from June 30, 1999 to December 31, 1999, leasing
revenue consisted of (in thousands):
Operating leases $557,066
Direct financing leases (primarily interest) 8,030
$565,096
Other managed vehicles with net carrying amounts of $233.6
million at December 31, 1999 are included in special purpose
entities which are not owned by DLPT. These entities do not
require consolidation as they do not meet the criteria for
consolidation under generally accepted accounting principles.
Additionally, managed vehicles totaling approximately $110.9
million at December 31, 1999 are owned by special purpose
entities, which are owned by affiliates of DLPT. However, such
assets and related liabilities have been netted in the balance
sheet since there is a two-party agreement with determinable
accounts, a legal right of offset exists and DLPT exercises its
right of offset in settlement with client corporations.
<PAGE>
6. RELATED PARTY TRANSACTIONS
Certain rebates received from the motor companies related to the
acquisition of vehicles are retained by PHH and therefore not
recorded in DLPT's accompanying financial statements.
Additionally, PHH provides various services at no charge to the
Trust, including all administrative support services,
accounting, management, and required personnel to conduct its
business.
* * * * * *
<PAGE>
D. L. PETERSON TRUST
UNAUDITED BALANCE SHEET AS OF MARCH 31, 2000
(in thousands)
ASSETS
Net investment in leases and leased vehicles
Operating leases . . . . . . . . . . . . . . . . . . . . $ 2,859,971
Direct financing leases . . . . . . . . . . . . . . . . 149,664
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,009,635
LIABILITIES AND TRUST EQUITY
LIABILITIES:
Liability under special unit of beneficial
interest in leases - related party . . . . . . . . . . . . $ 3,009,635
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 3,009,635
TRUST EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . --
TOTAL LIABILITIES AND MEMBERS' EQUITY . . . . . . . . . . . . . . $ 3,009,635
See notes to the unaudited financial statements.
<PAGE>
D.L. PETERSON TRUST
UNAUDITED STATEMENT OF OPERATIONS AND TRUST EQUITY
FOR THE QUARTER ENDED MARCH 31, 2000
(in thousands)
REVENUE:
Leasing revenue . . . . . . . . . . . . . . . . . . . . . . $ 285,232
EXPENSES:
Depreciation on leased vehicles . . . . . . . . . . . . . . 229,647
Interest on special unit of beneficial
interest in leases-related party . . . . . . . . . . . . . . 55,585
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . 285,232
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Trust equity, December 31, 1999 . . . . . . . . . . . . . . . . . --
Trust equity, March 31, 2000 . . . . . . . . . . . . . . . . . . $ --
See notes to the unaudited financial statements.
<PAGE>
D. L. PETERSON TRUST
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. GENERAL
D. L. Peterson Trust ("DLPT") was originally established by PHH
Vehicle Management Services, LLC ("PHH") as a Maryland common
law trust and was reconstituted as a Delaware statutory business
trust. DLPT is organized under Chapter 38 of the Delaware
Business Trust Act and its trustees are PHH and Wilmington Trust
Company. DLPT was established to hold title to vehicles and be
the lessor in vehicle leases, which are subject to various
securitizations. DLPT reduces the costs and administrative
burden with securitizations by eliminating the time and expense
of retitling vehicles upon transfer assignments of ownership of
the vehicles and security.
DLPT issued a certificate (the "Lease SUBI Certificate")
representing a special unit of beneficial interest in certain
leases (the "Lease SUBI") and two certificates representing a
special unit of beneficial interest in certain fleet service
receivables (the "Fleet Receivable SUBI") to Raven Funding LLC
("Raven"). The Lease SUBI represents a beneficial ownership in
the leases, vehicles and paid-in-advance vehicles owned by DLPT.
One of the certificates representing an interest in the Fleet
Receivable SUBI represents an amount up to $80 million (the
"Fleet Receivable SUBI Certificate") and the other certificate
representing an interest in the Fleet Receivable SUBI represents
the amount of fleet service receivables in excess of $80 million
(the "Excess Fleet Receivable SUBI Certificate"). DLPT also
issued to Raven a certificate (the "UTI Certificate")
representing beneficial ownership in all assets of DLPT not
allocated to the Lease SUBI or the Fleet Receivable SUBI (the
"UTI"). Raven transferred the Lease SUBI Certificate and the
Fleet Receivable SUBI Certificate to Greyhound Funding LLC.
Raven retained the Excess Fleet Receivable SUBI Certificate and
the UTI Certificate. As of March 31, 2000, no assets were
assigned to the UTI.
Raven is a special purpose limited liability company established
under the laws of the State of Delaware. The sole member of
Raven is PHH, a wholly-owned subsidiary of Avis Group Holdings,
Inc. ("Avis"). The business activities of Raven are limited
primarily to acting as the successor settler and initial
beneficiary of DLPT. Greyhound Funding LLC ("Greyhound"), is a
special purpose limited liability company organized under the
laws of the State of Delaware. The sole common member of
Greyhound is Raven. Greyhound was formed for the purpose of
issuing indebtedness, issuing preferred membership interests,
acquiring the Lease SUBI Certificate, and acquiring the Fleet
Receivable SUBI Certificate. PHH acts as servicer of the assets
held by the DLPT including the assets allocated to the Lease
SUBI and the Fleet Receivable SUBI. In its role as servicer,
PHH will maintain all property and equipment and employees
required to perform said servicing activities.
<PAGE>
The accompanying notes to the unaudited financial statements
should be read in conjunction with the audited financial
statements of DLPT for the period from June 30, 1999 to December
31, 1999 also included in this prospectus.
In the opinion of management all adjustments necessary for a
fair presentation of the financial position and results of
operations, as of and for the interim period, have been
included.
2. SPECIAL UNIT OF BENEFICIAL INTEREST IN FLEET RECEIVABLES
The Fleet Receivable SUBI represents the beneficial interest in
all of the Fleet Receivables acquired by Raven from PHH and
contributed by Raven to DLPT. The fleet receivables include
customer payment obligations arising from fuel card programs,
vehicle maintenance charges, and accident management services.
DLPT issued the Fleet Receivable SUBI Certificate and the Excess
Fleet Receivable SUBI Certificate to Raven. The Fleet
Receivable SUBI Certificate is capped at $80 million. The
remaining accounts receivable balance is represented by the
Excess Fleet Receivable SUBI Certificate.
As of March 31, 2000, accounts receivable consisted of the
following (in thousands):
Amounts billed $120,797
Allowance for doubtful accounts (2,515)
118,282
Assignments under Fleet Receivable SUBI (80,000)
Assignments under Excess Fleet Receivable SUBI (38,282)
Net receivables $ --
Allowance for Doubtful Accounts -An allowance for doubtful
accounts is generally established during the period in which
receivables are recorded. The allowance is maintained at a
level deemed appropriate based on historical experience and
other factors affecting collectibility.
3. NET INVESTMENT IN LEASE AND LEASED VEHICLES
DLPT offers primarily three leasing arrangements to its
customers. These arrangements are:
Open-end Operating Leases -Under these leases, the
minimum lease term is 12 months with a month to month
renewal thereafter. In addition, resale of the vehicles
upon termination of the lease is for the account of the
lessee except for a minimum residual value, which DLPT
guarantees. DLPT guarantees 16% of the original cost of
the unit for the first 24 months of the lease and then
16% of fair market value of the unit of inception of the
month to month renewal, thereafter. The guarantee is
adjusted for any excess wear and tear or any excess
mileage.
<PAGE>
Closed-end Operating Leases -Under these leases, the
minimum lease term is 18 months or longer; however, 24
and 36 month lease terms are the most prevalent. These
leases are cancelable under certain conditions. The
residual values for the closed-end leases are included
in the investment in leases and leased vehicles.
Residual value estimates are made utilizing third party
estimates and PHH's expertise. Resale of the vehicles
upon termination is for the account of the lessor.
Open-end Direct Financing Leases -Under these leases,
the minimum lease term is 12 months with a month to
month renewal thereafter. In addition, resale of the
vehicles upon termination of the lease is for the
account of the lessee.
Paid-in Advance Vehicles -These represent disbursements for
vehicles that have not yet been transferred to the investment in
leases and leased vehicles balance. These vehicles will
ultimately become eligible leases under the Lease SUBI.
Fleet Management Services -Revenues from Fleet Management
Services other than leasing are recognized over the period in
which services are provided and the related expenses are
incurred.
Other managed vehicles with net carrying amounts of $235.4
million at March 31, 2000 are included in special purpose
entities which are not owned by DLPT. These entities do not
require consolidation as they do not meet the criteria for
consolidation under generally accepted accounting principles.
Additionally, managed vehicles totaling approximately $111.4
million at March 31, 2000 are owned by special purpose entities,
which are owned by affiliates of DLPT. However, such assets and
related liabilities have been netted in the combined balance
sheets since there is a two-party agreement with determinable
accounts, a legal right of offset exists and DLPT exercises its
right of offset in settlement with client corporations.
4. RELATED PARTY TRANSACTIONS
Certain rebates received from the motor companies related to the
acquisition of vehicles are retained by PHH and therefore not
recorded in DLPT's accompanying financial statements.
* * * * * *
<PAGE>
PRINCIPAL OFFICE OF THE ISSUER PRINCIPAL OFFICE OF THE SERVICER
Greyhound Funding LLC PHH Vehicle Management Services LLC
900 Old Country Road 900 Old Country Road
Garden City, New York 11530 Garden City, New York 11530
INDENTURE TRUSTEE
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10036
UNDERWRITER
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
LEGAL ADVISOR TO GREYHOUND FUNDING LLC AND
PHH VEHICLE MANAGEMENT SERVICES LLC
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
LEGAL ADVISOR TO THE UNDERWRITERS
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
AUDITORS TO GREYHOUND FUNDING LLC
Deloitte & Touche LLP
1100 Mercantile Bank Building
2 Hopkins Plaza
Baltimore, Maryland 21201
LUXEMBOURG
CO-PAYING AGENT AND
CO-TRANSFER AGENT
LUXEMBOURG LISTING AGENT AND CO-REGISTRAR PAYING AGENT
Banque Generale du Chase Manhattan Bank The Chase Manhattan Bank
Luxembourg Luxembourg, S.A. 450 West 33rd Street
50, Avenue J.F. Kennedy 45 Boulevard Royal New York, New York 10036
L-2951 Luxembourg L-2955 Luxembourg
<PAGE>
Prospectus
$1,000,000,000
Greyhound Funding
LLC
$__________ Series 2000-1 Floating Rate Asset Backed Notes, Class A-1
$ Series 2000-1 Floating Rate Asset Backed Notes, Class A-2
PHH Vehicle Management
Services LLC,
As Servicer
Chase Securities Inc.
___________, 2000
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.
You should not assume that the information in this prospectus is accurate
on any date other than the date of this prospectus.
We are not offering these securities in any state where the offer is not
permitted.
Dealers will deliver a prospectus when acting as underwriters of these
securities and with respect to their unsold allotments or subscriptions.
In addition, all dealers selling these securities will deliver a
prospectus until , 2000.
<PAGE>
