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EXHIBIT 4.17
TEAM FLEET FINANCING CORPORATION
AS LESSOR
TEAM RENTAL GROUP, INC.
AS GUARANTOR
Those Subsidiaries of Team
Rental Group, Inc.
named on Schedule 1 hereto
as LESSEES
AMENDED AND RESTATED MASTER
MOTOR VEHICLE LEASE
AGREEMENT
Dated as of December 1, 1996
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TABLE OF CONTENTS
Page
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1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. GENERAL AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Acquisition of Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Right of Lessees to Act as Lessor's Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Payment of Capitalized Cost by Lessor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4. Non-liability of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5. Lessees' Rights to Purchase Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6. Lessor's Right to Cause vehicles to be Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1. The "Vehicle Lease Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2. The "Lease Commencement Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. RENT AND CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1. Certain Definition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2. Payment of Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3. Late Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4. Net Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1. Personal Injury and Damage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2. Delivery of Certificate of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3. Changes in Insurance Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. RISK OF LOSS AND CASUALTY OBLIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1. Risk of Loss Borne by Lessee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2. Casualty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. VEHICLE USE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9. NON-DISTURBANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. REGISTRATION: LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES. . . . . . . . . . . . . . . . . . . . . . . . . . 16
11. MAINTENANCE AND REPAIRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12. VEHICLE WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.1. No Lessor Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.2. Manufacturer's Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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13. VEHICLE USAGE GUIDELINES AND RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.1. Usage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.2. Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.3. Termination Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.4. Repurchase Price Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14. DISPOSITION PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. ODOMETER DISCLOSURE REQUIREMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16. GENERAL INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16.1. Indemnity by the Lessee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16.2. Reimbursement Obligation by the Lessee Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16.3. Defense of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
17. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17.1. Right of the Lessor to Assign this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17.2. Limitations on the Right of the Lessee to Assign this Agreement. . . . . . . . . . . . . . . . . . . 22
18. DEFAULT AND REMEDIES THEREFOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
18.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18.2. Effect of Lease Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18.3. Rights of Lessor Upon Lease Event of Default, Liquidation Event of Default or Limited
Liquidation Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18.4. Rights of Trustee Upon Liquidation Event of Default, Limited Liquidation Event of Default and
Non-Performance of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
18.5. Measure of Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.6. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
19. MANUFACTURER EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20. LESSEE PARTIAL WIND-DOWN EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21. ELIGIBILITY WAIVER EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
22. CERTIFICATION OF TRADE OR BUSINESS USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
24. ADDITIONAL LESSEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
25. TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
26. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
26.1. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
26.2. Scope of Guarantor's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
26.3. Lessor's Right to Amend this Agreement, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
26.4. Waiver of Certain Rights by Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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26.5. Lessees' Obligations to Guarantor and Guarantor's Obligations to Lessees Subordinated . . . . . . . . 34
26.6. Guarantor to Pay Lessor's Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
26.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
26.8. Pari Passu Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
27. RIGHTS OF LESSOR ASSIGNED TO TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
28. RIGHT OF LESSEE TO DELEGATE RIGHTS AND OBLIGATIONS HEREUNDER TO GUARANTOR . . . . . . . . . . . . . . . . . . . 38
29. MODIFICATION AND SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
30. CERTAIN REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
30.1. Due Organization, Authorization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
30.2. Financial Information; Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.3. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.4. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.5. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
30.6. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
30.7. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
30.8. Business Locations: Trade Names: Principal Places of Business Locations . . . . . . . . . . . . . . . 40
30.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
30.10. Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
30.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
30.12. Eligible Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
30.13. Supplemental Documents True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
31. CERTAIN AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
31.1. Corporate Existence: Foreign Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
31.2. Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
31.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
31.4. Repurchase Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
31.5. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
31.6. Taxes and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
31.7. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
31.8. Maintenance of Separate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
31.9. Trustee as Lienholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
32. CERTAIN NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
32.1. Mergers, Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
32.2. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
32.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
32.4. Use of Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
33. BANKRUPTCY PETITION AGAINST LESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
34. SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
35. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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36. JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
37. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
38. LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
39. TITLE TO REPURCHASE PROGRAMS IN LESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
40. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
41. EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
42. EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Schedule 1 Lessees on Date of Execution of Lease
Schedule 2 Lessees Selling Lessee Acquired
Vehicles on Date of Execution of Lease
Schedule 30.8 Business Locations
ATTACHMENT A Vehicle Acquisition Schedule
ATTACHMENT B FORM OF POWER OF ATTORNEY
ATTACHMENT C FORM OF JOINDER IN LEASE
ATTACHMENT D FORM OF ▇▇▇▇ OF SALE
SCHEDULE 1 TO ▇▇▇▇ OF SALE VEHICLE
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AMENDED AND RESTATED MASTER MOTOR VEHICLE LEASE AGREEMENT
This Amended and Restated Master Motor Vehicle Lease Agreement (this
"Agreement"), dated as of December 1, 1996, by and among TEAM FLEET FINANCING
CORPORATION, a Delaware corporation ("Lessor"), those direct or indirect
subsidiaries of Team Rental Group, Inc., a Delaware corporation ("Team") that
are listed on Schedule 1 hereto and those that become party to this Agreement
pursuant to the provisions of Section 24 hereof (individually, a "Lessee" and,
collectively, the "Lessees"), and TEAM RENTAL GROUP, INC., as guarantor (Team,
in such capacity, is referred to as the "Guarantor"; the Guarantor, together
with the Lessees is from time to time referred to as the "Lessee Group").
W I T N E S S E T H:
WHEREAS, the Lessor and the Lessees are parties to a Master Motor
Vehicle Lease and Servicing Agreement, dated July 1, 1994 (the "Prior
Agreement");
WHEREAS, the Lessor and the Lessees desire to amend and restate the
Prior Agreement in its entirety as hereinafter set forth;
WHEREAS, the Lessor has purchased or will purchase Vehicles from one
or more Manufacturers pursuant to such Manufacturers, respective Repurchase
Programs;
WHEREAS, the Lessor desires to lease to the Lessees and the Lessees
desire to lease from the Lessor Vehicles acquired by the Lessor pursuant to
such Repurchase Programs for use in the daily rental car businesses of the
Lessees; and
WHEREAS, the Guarantor has, pursuant to Section 26 hereof, guaranteed
the obligations of the Lessees under this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. Certain capitalized terms used herein (including the
preamble and the recitals hereto) shall have the meanings ascribed to such
terms in the Definitions List attached
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as Schedule 1 to the Base Indenture (the "Definitions List"), as such
Definitions List may be amended or modified from time to time in accordance
with the provisions of the Indenture.
2. GENERAL AGREEMENT. (a) Each Lessee and the Lessor intend that
this Agreement is a lease and that the relationship between the Lessor and the
Lessees pursuant hereto shall always be only that of lessor and lessee and each
Lessee hereby declares, acknowledges and agrees that the Lessor has title to
and is the owner of the Vehicles. No Lessee shall acquire by virtue of this
Agreement any right, equity, title or interest in or to any Vehicles, except
the right to use the same under the terms hereof. The parties agree that this
Agreement is a "true lease," and agree to treat this Agreement as a lease for
all purposes, including tax, accounting and otherwise.
(b) If, notwithstanding the intent of the parties to this Agreement,
this Agreement is characterized by any third party as a financing arrangement
or as otherwise not constituting a "true lease," then it is the intention of
the parties that this Agreement shall constitute a security agreement under
applicable law, and each Lessee hereby grants to the Lessor a first priority
security interest in all of such Lessee's right, title and interest, if any, in
and to all of the following assets, property and interests in property, whether
now owned or hereafter acquired or created:
(i) the rights of such Lessee under this Agreement, as same
may be amended, modified or supplemented from time to time in
accordance with its terms, and any other agreements related to or in
connection with this Agreement to which such Lessee is a party (the
"Lessee Agreements"), including, without limitation, (a) all monies
due and to become due to such Lessee from the Guarantor and the
Lessees under or in connection with the Lessee Agreements, whether
payable as rent, guaranty payments, fees, expenses, costs,
indemnities, insurance recoveries, damages for the breach of any of
the Lessee Agreements or otherwise, (b) all rights, remedies, powers,
privileges and claims of such Lessee against any other party under or
with respect to the Lessee Agreements (whether arising pursuant to the
terms of such Agreements or otherwise available to such Lessee at law
or in equity), including the right to enforce any of the Lessee
Agreements and to give or withhold any and all consents, requests,
notices, directions, approvals, extensions or waivers under or with
respect to the Lessee Agreements or the obligations of any party
thereunder, (c) all liens and property from time to time purporting to
secure payment arising under or in connection with the Lessee
Agreements, or assigned to, such Lessee describing any collateral
securing such obligations or liabilities and (d) all guarantees,
insurance
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and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such obligations and
liabilities of such Lessee pursuant to the Lessee Agreements;
(ii)(a) all vehicles leased by such Lessee from the Lessor
which, notwithstanding that this Agreement is intended to convey only
a leasehold interest, are determined to be owned by such Lessee, and
all Certificates of Title with respect to such Vehicles;
(iii) all right, title and interest of such Lessee in, to and
under any Repurchase Programs and all monies due and to become due
thereunder in respect of Vehicles leased under this Agreement which,
notwithstanding that this Agreement is intended to convey only a
leasehold interest, are determined to be owned by such Lessee, whether
payable as Vehicle repurchase prices, fees, expenses, costs,
indemnities, insurance recoveries, damages for breach of the
Repurchase Programs or otherwise;
(iv) the Collection Account; (a) all funds on deposit therein
from time to time; (b) all certificates and instruments, if any,
representing or evidencing any or all of the Collection Account or the
funds on deposit therein from time to time; and (c) all investments
made at any time and from time to time with the moneys in the
Collection Account (including income thereon);
(v) all additional property that may from time to time
hereafter be subjected to the grant and pledge under this Agreement,
as same may be modified or supplemented from time to time, by such
Lessee or by anyone on its behalf; and
(vi) all proceeds of any and all of the foregoing including,
without limitation, payments under insurance (whether or not the
Lessor is the loss payee thereof) and cash.
2.1. Acquisition of Vehicles. (a) From time to time, at the
discretion of the Lessor and the Lessees, subject to the terms and provisions
hereof, the Lessor agrees to lease to each Lessee and each Lessee agrees to
lease from the Lessor, subject to the terms hereof, the Vehicles identified in
Vehicle orders placed by the Lessees pursuant to the terms of the Repurchase
Programs (each, a "Vehicle Order"). If requested by the Lessor, each Lessee
shall make each Vehicle Order available to the Lessor, together with a schedule
containing the information with respect to the Vehicles included within such
Vehicle Order as is set forth in Attachment A hereto (each, a "Vehicle
Acquisition Schedule"), or in such form as is otherwise requested by the
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Lessor. In addition, each Lessee leasing Vehicles pursuant to such Vehicle
Order agrees to provide such other information regarding such Vehicles as the
Lessor may require from time to time. The Lessees and the Lessor acknowledge
that concurrently with the execution and delivery of this Agreement, the
Lessees specified on Schedule 1 have made available to the Lessor Vehicle
Orders to lease the Vehicles currently owned by the Lessor pursuant to this
Agreement, together with the required Vehicle Acquisition Schedules in respect
of such Vehicle Orders. Subject to the provisions of Section 21 hereof
(regarding Eligibility Waiver Events), the Lessor shall lease to the Lessees,
and the Lessees shall lease from the Lessor, only Vehicles purchased by the
Lessor pursuant to the terms of Eligible Repurchase Programs. This Agreement,
together with the Repurchase Programs and any other related documents attached
to this Agreement or submitted with a Vehicle Order (collectively, the
"Supplemental Documents"), will constitute the entire agreement regarding the
leasing of Vehicles by the Lessor to the Lessees.
(b) The Lessor and the Lessees each acknowledge that either
concurrently with the execution and delivery of this Agreement, or after the
date of this Agreement on not less than thirty (30) days written notice to the
Lessor and the Trustee, any Lessee (each, a "Selling Lessee") may sell Vehicles
(the "Lessee Acquired Vehicles") to the Lessor for a price equal to the Net
Book Value of such Lessee Acquired Vehicles, in which event such Lessee shall,
immediately upon the consummation of such sale, lease such Lessee Acquired
Vehicles from the Lessor pursuant to this Agreement (each such transaction is
referred to as "Lessee Sale Transaction"). Concurrently with the execution and
delivery of this Agreement, the Lessees listed on Schedule 2 hereto are selling
to the Lessor certain Lessee Acquired Vehicles. In connection with each Lessee
Sale Transaction, to evidence the conveyance of the Lessee Acquired Vehicles
from the Selling Lessee to the Lessor, the applicable Selling Lessee shall
deliver to the Lessor the following:
(i) a Vehicle Order (including a Vehicle Acquisition
Schedule) with respect to all Lessee Acquired Vehicles covered by such
Lessee Sale Transaction;
(ii) a report of the results of a search of the appropriate
records of the county and state in which the Lessee Acquired Vehicles
covered by such Lessee Sale Transaction are located and the county and
state in which the Selling Lessee's principal office is located, which
shall show no liens or other security interests (other than Permitted
Liens) with respect to the Lessee Acquired Vehicles covered by such
Lessee Sale Transaction or, in the event that such search reveals any
such Lien or security interest, there shall be delivered to the
Trustee a
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termination of such Lien or security interest in form acceptable for
filing;
(iii) confirmation from each lender holding a security
interest in any Lessee Acquired Vehicle covered by such Lessee Sale
Transaction stating unconditionally (A) that, if any sums are to be
paid to such lender in connection with such Lessee Sale Transaction,
such lender has been paid the full amount due to it in connection with
such Lessee Sale Transaction and (B) that any lien or security
interest of such lender in any such Lessee Acquired Vehicle has been
released;
(iv) the original Certificate of Title for each Lessee
Acquired Vehicle together with a completed application to retitle such
Lessee Acquired Vehicle in the name of the Lessor and to have noted
thereon the Trustee's security interest in such Lessee Acquired
Vehicle pursuant to the Indenture;
(v) Uniform Commercial Code termination statements
terminating, or Uniform Commercial Code partial releases releasing,
any security interests and other liens (other than Permitted Liens) in
favor of any Person with respect to each Lessee Acquired Vehicle
covered by such Lessee Sale Transaction and any related Repurchase
Program rights;
(vi) a ▇▇▇▇ of sale, substantially in the form attached
hereto as Attachment D (each, a "Lessee ▇▇▇▇ of Sale"), conveying
title to the Lessee Acquired Vehicles, and all right, title and
interest of the Selling Lessee to the applicable Repurchase Program
from the Selling Lessee to the Lessor; and
(vii) written confirmation from the applicable Manufacturer
that the Lessor will be authorized to return such Lessee Acquired
Vehicles to the Manufacturer under the Lessor's Repurchase Program.
In addition, the applicable Lessee shall deliver to the Trustee the
items required to be delivered to the Trustee pursuant to the provisions of
Section 13.21 of the Base Indenture.
(c) In order to induce the Lessor to purchase Lessee Acquired
Vehicles, each Selling Lessee shall be deemed to have represented and warranted
to and in favor of the Lessor and the Trustee, as of the date hereof or, with
respect to a Lessee Sale Transaction that takes place after the date of this
Agreement, as of the date of such Lessee Sale Transaction, as follows:
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(i) The Selling Lessee is the true and lawful owner of all
Lessee Acquired Vehicles listed on Schedule 1 to the applicable ▇▇▇▇
of Sale as being owned by such Selling Lessee;
(ii) The Lessee Acquired Vehicles listed on Schedule 1 to the
applicable ▇▇▇▇ of Sale as being owned by such Selling Lessee are not
subject to any lien, security interest or rights of any other party,
other than Permitted Liens;
(iii) The Lessee Acquired Vehicles listed on Schedule 1 to
the applicable ▇▇▇▇ of Sale as being owned by such Selling Lessee are
Eligible Vehicles and have not been held beyond the Maximum Term
applicable thereto;
(iv) All representations and warranties contained in this
Agreement with respect to "Vehicles" owned by "Lessees" are true and
correct as applied to the Lessee Acquired Vehicles listed on Schedule
1 to the applicable ▇▇▇▇ of Sale as being owned by such Selling
Lessee; and
(v) The purchase price being paid by the Lessor for the
Lessee Vehicles is listed on Schedule 1 to the applicable ▇▇▇▇ of Sale
and such price constitutes, with respect to each Vehicle, the Net Book
Value of such Vehicle.
Other than Lessee Sale Transactions complying with the provisions of this
Section 2.1, the Lessor shall not purchase any Vehicles from any Lessee. After
any purchase of Lessee Vehicles by the Lessor, such Lessee Vehicles will be
subject to all the terms and conditions of this Agreement.
2.2. Right of Lessees to Act as Lessor's Agent. The Lessor agrees
that any member of the Lessee Group may act as the Lessor's agent in placing
Vehicle Orders on behalf of the Lessor, as well as filing claims on behalf of
the Lessor for damage in transit, and other Manufacturer delivery claims
related to the Vehicles leased hereunder; provided, however, that the Lessor
may hold the Lessee Group liable for losses due to such member of the Lessee
Group's actions in performing as the Lessor's agent hereunder. In addition,
the Lessor agrees that each Lessee may make arrangements for delivery of
Vehicles to a location selected by the relevant Lessee at such Lessee's
expense. Each Lessee agrees to accept Vehicles as produced and delivered
except each Lessee will have the option to reject any Vehicle that may be
rejected pursuant to the terms of the applicable Repurchase Program. The
relevant Lessee, acting as agent for the Lessor, shall be responsible for
pursuing any rights of the Lessor with respect to the return of any Vehicle to
the Manufacturer pursuant to the preceding sentence. Subject to the provisions
of Section
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21 hereof regarding Eligibility Waiver Events), any member of the Lessee Group
that places a Vehicle Order pursuant to this Agreement agrees that all Vehicles
ordered as provided herein shall be ordered utilizing the procedures consistent
with an Eligible Repurchase Program.
2.3. Payment of Capitalized Cost by Lessor. Upon delivery of any
Vehicle, the Lessor shall pay to the Manufacturer the costs and expenses
incurred by it in connection with the acquisition of Vehicles under the
Repurchase Program as established by the Manufacturer's invoice (the
"Capitalized Cost") for such Vehicle and the relevant Lessee shall pay all
applicable costs and expenses of freight, packing, handling, storage, shipment
and delivery of such Vehicle to the extent that the same have not been included
within the Capitalized Cost.
2.4. Non-liability of Lessor. The Lessor shall not be liable to any
of the Lessees for any failure or delay in obtaining Vehicles or making
delivery thereof. AS BETWEEN THE LESSOR AND EACH LESSEE, ACCEPTANCE FOR LEASE
OF THE VEHICLES SHALL CONSTITUTE SUCH LESSEE'S ACKNOWLEDGMENT AND AGREEMENT
THAT SUCH LESSEE HAS FULLY INSPECTED SUCH VEHICLES, THAT THE VEHICLES ARE IN
GOOD ORDER AND CONDITION AND ARE OF THE MANUFACTURE, DESIGN, SPECIFICATIONS AND
CAPACITY SELECTED BY THE LESSEE, THAT SUCH LESSEE IS SATISFIED THAT THE SAME
ARE SUITABLE FOR THIS USE AND THAT THE LESSOR IS NOT A MANUFACTURER OR ENGAGED
IN THE SALE OR DISTRIBUTION OF VEHICLES, AND HAS NOT MADE AND DOES NOT HEREBY
MAKE ANY REPRESENTATION, WARRANTY OR COVENANT WITH RESPECT TO MERCHANTABILITY,
CONDITION, QUALITY, DURABILITY OR SUITABILITY OF THE VEHICLE IN ANY RESPECT OR
IN CONNECTION WITH OR FOR THE PURPOSES OR USES OF SUCH LESSEE, OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO. The Lessor shall not be liable for any failure
or delay in delivering any Vehicle ordered for lease pursuant to this
Agreement, or for any failure to perform any provision hereof, resulting from
fire or other casualty, natural disaster, riot, strike or other labor
difficulty, governmental regulation or restriction, or any cause beyond the
Lessor's direct control. IN NO EVENT SHALL THE LESSOR BE LIABLE FOR ANY
INCONVENIENCES, LOSS OF PROFITS OR ANY OTHER CONSEQUENTIAL, INCIDENTAL OR
SPECIAL DAMAGES RESULTING FROM ANY DEFECT IN OR ANY THEFT, DAMAGE, LOSS OR
FAILURE OF ANY VEHICLE, AND THERE SHALL BE NO ABATEMENT OF RENT BECAUSE OF THE
SAME.
2.5. Lessees' Rights to Purchase Vehicles. Each Lessee will have the
option, exercisable with respect to any Vehicle during the Vehicle Term with
respect to such Vehicle, to purchase any Vehicles leased under this Agreement
at the greater of (i) the applicable Net Book Value or (ii) the fair market
value of the Vehicle as established by the "Black Book" published by National
Auto Research Division of Hearst Business Corporation
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or, if such "Black Book" is no longer published, a national publication then
currently accepted in the United States automobile rental industry for the
valuation of Vehicles, which is proposed by the Servicer and approved by the
Lessor, such approval not to be unreasonably withheld or delayed (the greater
of such amounts being referred to as the "Vehicle Purchase Price"), in which
event such Lessee will pay the Vehicle Purchase Price to the Lessor on or
before the Due Date next succeeding such purchase by the relevant Lessee plus
all accrued and unpaid Monthly Base Rent and Monthly Variable Rent with respect
to such Vehicle through the date of such purchase. The Lessor shall cause
title to any such Vehicle to be transferred to the relevant Lessee, and the
Servicer shall cause the Trustee to cause its lien to be removed from the
certificate of title for such Vehicle, concurrently with or promptly after the
Vehicle Purchase Price for such Vehicle (and any such unpaid Monthly Base Rent
and Monthly Variable Rent) is paid by such Lessee to the Trustee.
2.6. Lessor's Right to Cause vehicles to be Sold. Notwithstanding
anything to the contrary contained herein, the Lessor shall have the right, at
any time prior to the date thirty (30) days prior to the expiration of the
Maximum Term for any Vehicle, to require that the Lessee leasing such Vehicle
from the Lessor hereunder exercise commercially reasonable efforts to arrange
for the sale of such Vehicle to a third party for a price greater than the Net
Book Value thereof, in which event such Lessee shall, until not later than the
date thirty (30) days prior to the expiration of such Maximum Term, exercise
commercially reasonable efforts to arrange for the sale of such Vehicle to a
third party for a price greater than the Net Book Value or purchase the Vehicle
from the Lessor for the Vehicle Purchase Price. If a sale of the Vehicle is
arranged by the Lessee prior to such date thirty (30) days prior to the
expiration of such Maximum Term, then the Lessee shall deliver the vehicle to
the purchaser thereof, the Lien of the Trustee on the Certificate of Title of
such Vehicle shall be released, and the Lessee shall cause to be delivered to
the Lessor the funds paid for such Vehicle by the purchaser. If the Lessee is
unable to arrange for a sale of the Vehicle prior to such date thirty (30) days
prior to the expiration of such Maximum Term, then the Lessee shall cease
attempting to arrange for such a sale and shall return such vehicle to the
applicable Manufacturer as herein provided. In no event may any Vehicle be
sold pursuant to this Section 2.6 unless the funds to be paid to the Lessor
arising out of such sale exceed the Net Book Value of such Vehicle.
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3. TERM.
3.1. The "Vehicle Lease Commencement Date" for each Vehicle shall
mean the day as referenced in the Vehicle Acquisition Schedule with respect to
such Vehicle but in no event beyond the date that funds are expended by the
Lessor to acquire such Vehicle. The "Vehicle Term" with respect to each
Vehicle shall extend from the Vehicle Lease Commencement Date through the
earliest of (i) the Turnback Date for such Vehicle, (ii) if the Vehicle is sold
to a third party (other than through an auction conducted by or through or
arranged by the Manufacturer pursuant to its Repurchase Program), the date on
which such funds in respect of such sale are received by the Trustee (from such
third party or from any member of the Lessee Group on behalf of such third
party) and such funds equal or exceed the Net Book Value of such vehicle, (iii)
if the Vehicle becomes a Casualty, the date funds in the amount of the Net Book
Value thereof are received by the Trustee from the applicable Lessee, or (iv)
the date that the Vehicle is purchased by the applicable Lessee pursuant to
Section 2.5 hereof and the Vehicle Purchase Price with respect to such purchase
(and any unpaid Monthly Base Rent and Monthly Variable Rent with respect to
such Vehicle) is received by the Trustee (the earliest of such four dates being
referred to as the "Vehicle Lease Expiration Date"). The Lessor and each
Lessee agree that each Lessee shall use its commercially reasonable efforts to
return each Vehicle to the related Manufacturer (a) not prior to the end of the
minimum holding period specified in the related Repurchase Program (prior to
which the Lessor may not return such Vehicle without penalty (the "Minimum
Term")) and (b) not later than the end of the maximum holding period (after
which the Lessor may not return such vehicle without penalty (the "Maximum
Term")); provided, however, if for any reason, a Lessee fails to return a
Vehicle to the applicable Manufacturer during the time period between the
expiration of the Minimum Term and the expiration of the Maximum Term, such
Lessee shall be obligated to purchase such Vehicle from the Lessor on the first
Due Date after the expiration of the Maximum Term for an amount equal to the
Vehicle Purchase Price with respect to such Vehicle. Each Lessee will pay the
equivalent of the Rent for the Minimum Term for Vehicles returned before the
Minimum Term, regardless of actual usage, unless a Vehicle is a Casualty which
will be handled in accordance with Section 6 hereof.
3.2. The "Lease Commencement Date" shall mean the earlier of (i) the
date of the issuance of the first Series of Notes or (ii) the date of the
Vehicle Lease Commencement Date for the first Vehicle leased by a Lessee
hereunder. The "Lease Expiration Date" shall mean the later of (i) the date of
the payment in full of all Series of Notes and all outstanding Carrying Charges
and (ii) the Vehicle Lease Expiration Date for the last Vehicle leased by a
Lessee hereunder. The "Term" of
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this Agreement shall mean the period commencing on the Lease Commencement Date
and ending on the Lease Expiration Date.
4. RENT AND CHARGES. Each Lessee will pay Rent on a monthly basis as
set forth in this Section 4:
4.1. Certain Definition. As used herein the following terms have the
following meanings:
"Monthly Base Rent" with respect to each Due Date and each
Vehicle shall equal the sum of the following, without double counting,
(a) the Depreciation Charge for the Related Month for such Vehicle
plus (b) the aggregate Net Book Value of such Vehicle, if such Vehicle
became a Casualty during the Related Month or was sold to any person
(other than to a Manufacturer pursuant to such Manufacturer's
Repurchase Program or to a third party pursuant to an auction
conducted through a Manufacturer's Repurchase Program) plus (c) the
aggregate Net Book Value of such Vehicle, if such Vehicle was returned
to the applicable Manufacturer and such Manufacturer paid the
Repurchase Price during the Related Month to a Lessee minus (d) any
amount received by the Lessor or the Trustee, and deposited into the
Collection Account, during the Related Month from the applicable
Manufacturer as the Repurchase Price for the repurchase of such
Vehicle or from a third party other than a Manufacturer for the
purchase of such Vehicle plus (e) the aggregate amount of Termination
Payments that became due during the Related Month with respect to such
Vehicle plus (f) the aggregate amount of Repurchase Price Interest
that became due during the Related Month with respect to such Vehicle.
"Monthly Supplemental Rent" with respect to each Due Date
shall be equal to (x) the accrued interest on all Series of Notes for
the Related Month, plus (y) the Carrying Charges for the Related
Month, minus (z) the aggregate of all Monthly Variable Rent accrued
with respect to the Related Month for all Vehicles.
"Monthly Variable Rent" with respect to each Due Date and with
respect to each Vehicle shall equal the sum of (a) an amount equal to
the Net Book Value of such Vehicle during the Related Month multiplied
by the VFR for a one year interest period, multiplied by a fraction,
the numerator of which shall be 30 and the denominator of which shall
be 360 and (b) the product of (i) an amount equal to (x) all Carrying
Charges for the Related Month less (y) any accrued earnings on
Permitted Investments in the Collection Account which are available
for distribution on the last Business Day of the Related Month and
(ii) a fraction, the numerator of which is the Net Book Value of such
vehicle and the
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denominator of which is the Net Book Value of all Vehicles. In the
event the Vehicle Lease Commencement Date occurs with respect to such
Vehicle on a day other than the last day of a Related Month, the
Monthly Variable Rent for such Vehicle shall be equal to the product
of (a) the Monthly Variable Rent otherwise payable with respect to
such Vehicle, multiplied by (b) a fraction the numerator of which is
12 and the denominator of which is 360, multiplied by (c) the number
of days in such Related Month from, after and including such Vehicle
Lease Commencement Date through and including the last day of such
Related Month. In the event the Vehicle Lease Expiration Date occurs
with respect to such Vehicle during a Related Month, the Monthly
Variable Rent for such Vehicle shall be equal to the product of (a)
the Monthly Variable Rent otherwise payable with respect to such
Vehicle for the Related Month, multiplied by (b) a fraction the
numerator of which is 12 and the denominator of which is 360,
multiplied by (c) the number of days in such Related Month from, after
and including the first day of such Related Month through and
including the Vehicle Lease Expiration Date.
"Rent" means Monthly Base Rent, Monthly Variable Rent and
Monthly Supplemental Rent.
"VFR" for any period, is an interest rate equal to (i) the
amount of interest accrued during such period with respect to all
Series of Notes divided by (ii) the average daily Invested Amounts of
all Series of Notes during such period.
4.2. Payment of Rent. On each Due Date:
4.2.1. Monthly Base Rent. Each Lessee shall pay to the Lessor all
Monthly Base Rent that has accrued during the Related Month with respect to
each Vehicle leased hereunder by such Lessee;
4.2.2. Monthly Variable Rent. Each Lessee shall pay to the Lessor
all Monthly Variable Rent that has accrued during the Related Month with
respect to each Vehicle leased hereunder by such Lessee; and
4.2.3. Monthly Supplemental Rent. Each Lessee shall pay such
Lessee's Share of the Monthly Supplemental Rent that has accrued during the
Related Month less any earnings on Permitted Investments not taken into account
in the calculation of Monthly Variable Rent.
4.3. Late Payment. In the event the relevant Lessee fails to remit
payment of any amount due on or before the Due Date, the
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amount not paid will be considered delinquent and such Lessee will pay a late
charge equal to the VFR plus 1%, times the delinquent amount for the period
from the Due Date until such delinquent amount is received by the Trustee.
4.4. Net Lease. THIS AGREEMENT SHALL BE A NET LEASE, AND EACH
LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE
AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR
ANY REASON WHATSOEVER. The obligations and liabilities of each Lessee
hereunder shall in no way be released, discharged or otherwise affected (except
as may be expressly provided herein including, without limitation, the right of
each Lessee to reject vehicles pursuant to Section 2.2 hereof) for any reason,
including without limitation: (i) any defect in the condition, merchantability,
quality or fitness for use of the Vehicles or any part thereof; (ii) any damage
to, removal, abandonment, salvage, loss, scrapping or destruction of or any
requisition or taking of the Vehicles or any part thereof; (iii) any
restriction, prevention or curtailment of or interference with any use of the
Vehicles or any part thereof; (iv) any defect in or any Lien on title to the
Vehicles or any part thereof; (v) any change, waiver, extension, indulgence or
other action or omission in respect of any obligation or liability of the
relevant Lessee or the Lessor; (vi) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the relevant Lessee, the Lessor or any other Person, or any action
taken with respect to this Agreement by any trustee or receiver of any Person
mentioned above, or by any court; (vii) any claim that the relevant Lessee has
or might have against any Person, including without limitation the Lessor;
(viii) any failure on the part of the Lessor to perform or comply with any of
the terms hereof or of any other agreement; (ix) any invalidity or
unenforceability or disaffirmance of this Agreement or any provision hereof or
any of the other Related Documents or any provision of any thereof, in each
case whether against or by the relevant Lessee or otherwise; (x) any insurance
premiums payable by the relevant Lessee with respect to the Vehicles; or (xi)
any other occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not the relevant Lessee shall have notice or knowledge of
any of the foregoing and whether or not foreseen or foreseeable. This
Agreement shall be noncancelable by the Lessees and, except as expressly
provided herein, each Lessee, to the extent permitted by law, waives all rights
now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Agreement, or to any diminution or reduction of Rent payable by
each Lessee hereunder. All payments by each Lessee made hereunder shall be
final (except to the extent of adjustments provided for herein), absent
manifest error and, except as otherwise provided herein, each Lessee shall not
seek to recover any such payment or any part thereof for any reason whatsoever,
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absent manifest error. If for any reason whatsoever this Agreement shall be
terminated in whole or in part by operation of law or otherwise except as
expressly provided herein, each Lessee shall nonetheless pay an amount equal to
each Rent payment at the time and in the manner that such payment would have
become due and payable under the terms of this Agreement as if it had not been
terminated in whole or in part. All covenants and agreements of each Lessee
herein shall be performed at its cost, expense and risk unless expressly
otherwise stated.
5. INSURANCE. Each Lessee represents that it shall at all times
maintain insurance coverage in force as follows:
5.1. Personal Injury and Damage. Insurance coverage (i) in an amount
not less than $10,000,000 per occurrence with respect to personal injury and
damage claims arising from the use of the Vehicles, except that with respect to
Vehicles used in connection with any member of the Lessee Group's San Diego
operations, the Lessee Group will be permissively uninsured (i.e., the Lessee
Group will self-insure) under California law up to the first $35,000 of
liability per occurrence, (ii) in respect of the Lessee Group's San Diego
operations, in an amount not less than $10,000,000 per occurrence for damages
arising from its employees' use of Vehicles and negligent maintenance of
Vehicles, and (iii) in respect of the Lessee Group's San Diego operations, in
an amount not less than $1,000,000 per occurrence for damages arising out of
negligent entrustment (less a $35,000 deductible in respect of negligent
entrustment).
5.2. Delivery of Certificate of Insurance. Within 10 days after the
date the first Series of Notes is issued (or, with respect to any additional
party becoming a "Lessee" hereunder pursuant to the provisions of Section 24
hereof, within 10 days after such party becomes a "Lessee," hereunder), the
Lessee Group shall deliver to the Lessor a certificate(s) of insurance naming
the Lessor and the Trustee as additional insureds as to the items required by
Section 5.1 hereinabove. Such insurance shall not be changed or canceled
except as provided below in Section 5.3.
5.3. Changes in Insurance Coverage. No changes shall be made in any
of the foregoing insurance unless the prior written consent of the Lessor and
the Trustee are first obtained. The Lessor may grant or withhold its consent
to any proposed change in such insurance in its sole discretion. The Trustee
shall be required to grant its consent to any proposed change in such insurance
upon compliance with the following conditions:
(i) The Lessee Group shall deliver not less than 30 days
written notice of any proposed change in such insurance to the
Trustee, which notice shall contain a certification of a reputable
insurance broker that is not affiliated with
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19
any member of the Lessee Group that the insurance program maintained
by the Lessee Group (after the taking effect of such proposed change)
comports with industry standards for persons engaged in the rental car
business and having net worth and operating income similar to that of
the Lessee Group; and
(ii) The Lessee Group shall furnish to the Trustee a letter
from each Rating Agency with respect to each outstanding Series of
Notes to the effect that such proposed change will not cause a
reduction in or a withdrawal of such rating.
6. RISK OF LOSS AND CASUALTY OBLIGATION.
6.1. Risk of Loss Borne by Lessee. Upon delivery of each Vehicle to
the relevant Lessee, as between the Lessor and such Lessee, such Lessee assumes
and bears the risk of loss, damage, theft, taking, destruction, attachment,
seizure, confiscation or requisition with respect to such Vehicle, however
caused or occasioned, and all other risks and liabilities, including personal
injury or death and property damage, arising with respect to any Vehicle or the
manufacture, purchase, acceptance, rejection, ownership, delivery, leasing,
subleasing, possession, use, inspection, registration, operation, condition,
maintenance, repair, storage, sale, return or other disposition of such
Vehicle, howsoever arising.
6.2. Casualty. If a Vehicle becomes a Casualty, then the Lessee that
is leasing such Vehicle will (i) promptly notify the Lessor thereof and (ii)
promptly, but in no event more than fifteen (15) days after such Vehicle
becomes a Casualty, pay to the Lessor the Net Book Value of such Vehicle. Upon
payment by the Lessee to the Lessor of the Net Book value of any Vehicle that
has become a Casualty (i) the Lessor shall cause title to such Vehicle to be
transferred to the relevant Lessee to facilitate liquidation of such Vehicle by
the Lessee, (ii) such Lessee shall be entitled to any physical damage insurance
proceeds applicable to such vehicle, and (iii) the Lien of the Trustee on such
Vehicle shall be released by the Servicer.
7. VEHICLE USE. So long as no Lease Event of Default has occurred
and so long as no Lessee Partial Wind-Down Event has occurred with respect to
the relevant Lessee (subject, however, to Section 2.6 hereof), such Lessee may
use Vehicles leased hereunder in the regular course of business of such Lessee.
Such use shall be confined primarily to the United States, with limited use in
Canada and Mexico; provided, however, that the principal place of business or
rental office of such Lessee with respect to the Vehicles is located in the
United States. The relevant Lessee shall promptly and duly execute, deliver,
file
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and record all such documents, statements, filings and registrations, and take
such further actions as the Lessor, the Servicer or the Trustee shall from time
to time reasonably request in order to establish, perfect and maintain the
Lessor's title to and interest in the Vehicles and the Certificates of Title as
against such Lessee or any third party in any applicable jurisdiction and to
establish, perfect and maintain the Trustee's lien on the Vehicles and the
Certificates of Title as a perfected first lien in any applicable jurisdiction.
Each Lessee may, at the relevant Lessee's sole expense, change the place of
principal location of any Vehicles. Notwithstanding the foregoing, no change
of location shall be undertaken unless and until (i) all actions necessary to
maintain the Lien of the Trustee on such Vehicles and the Certificates of Title
with respect to such Vehicles shall have been taken and (ii) all legal
requirements applicable to such Vehicles shall have been met or obtained.
Following a Lease Event of Default, Lessee Partial Wind-Down Event or
Manufacturer Event of Default, and upon the Lessor's request, the relevant
Lessee shall advise the Lessor in writing where all Vehicles leased hereunder
as of such date are principally located. The Lessee shall not knowingly use
any Vehicles or knowingly permit the same to be used for any unlawful purpose.
Each Lessee shall use reasonable precautions to prevent loss or damage to
Vehicles. Each Lessee shall comply with all applicable statutes, decrees,
ordinances and regulations regarding acquiring, titling, registering, leasing,
insuring and disposing of Vehicles and shall take reasonable steps to ensure
that operators are licensed. Each Lessee and the Lessor agree that each Lessee
shall perform, at its own expense, such Vehicle preparation and conditioning
services with respect to Vehicles purchased by the Lessor from the
Manufacturers as are customary. The Lessor or the Trustee or any authorized
representative of the Lessor or the Trustee may during reasonable business
hours from time to time, without disruption of each Lessee's business, subject
to applicable law, inspect Vehicles and registration certificates, Certificates
of Title and related documents covering Vehicles wherever the same be located.
Each Lessee shall not sublease any Vehicles, nor shall such Lessee assign any
right or interest herein or in any Vehicles; provided, however, that the
foregoing shall not be deemed to prohibit the Lessees from renting Vehicles to
third party customers in the ordinary course of their car rental businesses.
8. LIENS. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it free of all Liens arising during the Term. Upon the
Vehicle Lease Termination Date for each Vehicle leased hereunder should any
such Lien exist the Lessor may, in its discretion, remove such Lien and any sum
of money that may be paid by the Lessor in release or discharge thereof,
including attorneys' fees and costs, will be paid by the Lessee upon demand by
the Lessor. The Lessor may grant security
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interests in the Vehicles without consent of the relevant Lessee; provided,
however, that if any such Liens would interfere with the rights of such Lessee
under this Agreement, the Lessor must obtain the prior written consent of such
Lessee. Each Lessee acknowledges that the granting of Liens and the taking of
other actions pursuant to the Indenture and the Related Documents does not
interfere with the rights of such Lessee under this Agreement.
9. NON-DISTURBANCE. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Vehicles will not be
disturbed during the Term subject, however, to Section 2.6 hereof and except
that the Lessor and the Trustee each retains the right but not the duty, to
inspect the Vehicles without disturbing the ordinary conduct of such Lessee's
business. Upon the request of the Lessor or the Trustee from time to time,
each Lessee will make reasonable efforts to confirm to the Lessor and the
Trustee the location, mileage and condition of each Vehicle and to make
available for the Lessor's or the Trustee's inspection within a reasonable time
period, not to exceed 45 days, the Vehicles at the location where the Vehicles
are normally domiciled. Further, each Lessee will, during normal business
hours and with a notice of 3 Business Days, make its records pertaining to the
Vehicles available to the Lessor or the Trustee for inspection at the location
where the Lessee's records are normally domiciled.
10. REGISTRATION: LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES.
The Lessee Group, at its expense, shall be responsible for proper registration
and licensing of Vehicles, and titling of Vehicles in the name of the Lessor
(with the Lien of the Trustee noted thereon) and, where required, shall have
Vehicles inspected by any appropriate governmental authority; provided,
however, that notwithstanding the foregoing, possession of all Certificates of
Title shall at all time remain with the Servicer in accordance with the
provisions of the Indenture. The Lessee leasing such Vehicle shall be
responsible for the payment of all registration fees, title fees, license fees,
traffic summonses, penalties, judgments and fines incurred with respect to any
Vehicle during the Vehicle Term for such Vehicle or imposed during the Vehicle
Term for such Vehicle by any governmental authority or any court of law or
equity with respect to Vehicles in connection with the relevant Lessee's
operation of Vehicles, and any such amounts paid by the Lessor, in its
discretion, on the relevant Lessee's behalf will be reimbursed within 30 days
of the Lessor notifying such Lessee of such payment. The Lessor agrees to
execute a power of attorney in the form of Attachment B hereto (each, a "Power
of Attorney"), and such other documents as may be necessary in order to allow
the Lessees to title, register and dispose of the Vehicles; provided, however,
that possession of all Certificates of Title shall at all times remain with the
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Servicer in accordance with the provisions of the Indenture and each Lessee
acknowledges and agrees that it has no right, title or interest in or with
respect to any Certificate of Title. Notwithstanding anything herein to the
contrary, the Lessor may terminate such Power of Attorney as provided in
Section 18 hereof.
11. MAINTENANCE AND REPAIRS. Each Lessee shall pay for all
maintenance and repairs to keep Vehicles in good working order and condition,
and will maintain Vehicles as required in order to keep the Manufacturer's
warranty in force. Each Lessee will return Vehicles to an authorized
Manufacturer facility or the relevant Lessee's Manufacturer authorized warranty
station for warranty work. Each Lessee will comply with any Manufacturer's
recall of any Vehicle. Each Lessee will pay, or cause to be paid, all usual
and routine expenses incurred in the use and operation of Vehicles including,
but not limited to, fuel, lubricants, and coolants. Any such expenses not paid
by, or on behalf of, the relevant Lessee may, after 30 days notice to such
Lessee, be paid by the Lessor and any expenses incurred by the Lessor on such
Lessee's behalf for maintenance, repair, operation or use of Vehicles by such
Lessee will be promptly reimbursed (in any event no later than the next monthly
Due Date following such notice) by such Lessee to the Lessor in the amount paid
by the Lessor. Each Lessee shall not make any material alterations to any
vehicles without the prior consent of the Lessor. Any improvements or
additions to any Vehicles shall become and remain the property of the Lessor,
except that any addition to Vehicles made by the relevant Lessee shall remain
the property of such Lessee if it can be disconnected from Vehicles without
impairing the functioning of such Vehicles or its resale value, excluding such
addition.
12. VEHICLE WARRANTIES.
12.1. No Lessor Warranties. EACH LESSEE ACKNOWLEDGES THAT THE LESSOR
IS NOT THE MANUFACTURER, THE AGENT OF THE MANUFACTURER, OR THE DISTRIBUTOR OF
THE VEHICLES LEASED HEREUNDER. THE LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, AS TO THE FITNESS, SAFENESS, DESIGN, MERCHANTABILITY,
CONDITION, QUALITY, CAPACITY OR WORKMANSHIP OF THE LEASED VEHICLES NOR ANY
WARRANTY THAT THE LEASED VEHICLES WILL SATISFY THE REQUIREMENTS OF ANY LAW OR
ANY CONTRACT SPECIFICATION, AND AS BETWEEN THE LESSOR AND EACH LESSEE, EACH
LESSEE AGREES TO BEAR ALL SUCH RISKS AT ITS SOLE COST AND EXPENSE. EACH LESSEE
SPECIFICALLY WAIVES ALL RIGHTS TO MAKE CLAIMS AGAINST THE LESSOR AND ANY LEASED
VEHICLE FOR BREACH OF ANY WARRANTY OF ANY KIND WHATSOEVER AND, AS TO THE
LESSOR, EACH LESSEE LEASES THE LEASED VEHICLES "AS IS." IN NO EVENT SHALL THE
LESSOR BE LIABLE FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHATSOEVER
OR HOWSOEVER CAUSED.
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12.2. Manufacturer's Warranties. If a Vehicle is covered by a
Manufacturer's warranty, each Lessee, during the Vehicle Term, shall have the
right to make any claims under such warranty which the Lessor could make.
13. VEHICLE USAGE GUIDELINES AND RETURN.
13.1. Usage. As used herein "vehicle turn-in condition" with respect
to each Vehicle will be determined in accordance with the related Repurchase
Program. Vehicles not meeting the applicable Repurchase Program's vehicle
turn- in condition guidelines will be purchased by the relevant Lessee in
accordance with the Casualty procedure set forth in Section 6.2.
13.2. Return. Each Lessee will return each Vehicle (other than a
Casualty) to the nearest related Manufacturer official auction or other
facility designated by such manufacturer at the relevant Lessee's sole expense.
Each Lessee agrees that the Vehicles will be in vehicle turn-in condition as
specified in the applicable Repurchase Program. Any rebates or credits
applicable to the unexpired term of any license plates for a Vehicle shall
inure to the benefit of the relevant Lessee.
13.3. Termination Payments. Upon receipt of payment of the
Repurchase Price of each Vehicle from the Manufacturer (or the receipt of
payment of the Repurchase Price of each Vehicle through an auction conducted by
or through a Manufacturer), the Lessor will charge the relevant Lessee for any
Excess Damage Charges, Excess Mileage Charges or early turnback surcharges as
determined by the Manufacturer or its agent in accordance with the applicable
Repurchase Program (any such charges are referred to as "Termination Payment").
The provisions of this Section 13.3 will survive the expiration or earlier
termination of the Term.
13.4. Repurchase Price Interest. The applicable Lessee shall pay to
the Lessor, as part of the Monthly Base Rent, interest accrued at a rate equal
to the VFR on the Repurchase Price of each Vehicle for the period between the
Turnback Date for such Vehicle and receipt of such Repurchase Price by the
Lessor from the Manufacturer ("Repurchase Price Interest"). The provisions of
this Section 13.4 will survive the expiration or earlier termination of the
Term.
14. DISPOSITION PROCEDURE. Each Lessee will comply with the
requirements of law and the requirements of the Repurchase Programs in
connection with, among other things, the delivery of Certificates of Title and
documents of transfer signed as necessary, signed Condition Report, and signed
odometer statement to be submitted with the Vehicles and accepted by the
Manufacturer or its agent at the time of Vehicle return. If a
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Vehicle is not returned to the Manufacturer and accepted by the Manufacturer
prior to the Maximum Term with respect to such Vehicle, the relevant Lessee
shall purchase such Vehicle for the appropriate Vehicle Purchase Price and pay
the Lessor such amount within fifteen (15) days after the end of the Maximum
Term (together with any Repurchase Price Interest accrued from the last day of
the Maximum Term to the date that such payment is received by the Lessor).
15. ODOMETER DISCLOSURE REQUIREMENT. Each Lessee agrees to comply
with all requirements of law and all Repurchase Program requirements in
connection with the transfer of ownership of any Vehicle by the Lessor,
including, without limitation, the submission of any required odometer
disclosure statement at the time of any such transfer of ownership.
16. GENERAL INDEMNITY.
16.1. Indemnity by the Lessee. Each member of the Lessee Group
agrees jointly and severally to indemnify and hold harmless the Lessor and the
Lessor's directors, officers, agents and employees (collectively, the
"Indemnified Persons"), against any and all claims, demands and liabilities of
whatsoever nature and all costs and expenses relating to or in any way arising
out of:
16.1.1. the ordering, delivery, acquisition, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, re-registration, custody by the Lessee Group of title
and registration documents, use, nonuse, misuse, operation,
deficiency, defect, transportation, repair, control or disposition of
any Vehicle leased hereunder or to be leased hereunder pursuant to a
request by the relevant Lessee. The foregoing shall include, without
limitation, any liability (or any alleged liability) of the Lessor to
any third party arising out of any of the foregoing, including,
without limitation, all legal fees, costs and disbursements arising
out of such liability (or alleged liability);
16.1.2. all (i) federal, state, county, municipal, foreign or
other fees and taxes of whatsoever nature, including but not limited
to license, qualification, registration, franchise, sales, use, gross
receipts, ad valorem, business, property (real or personal), excise,
motor vehicle, and occupation fees and taxes, and all federal, state
and local income taxes (including any taxes which are payable by the
Lessor as a result of it being a member of the consolidated Lessee
Group), and penalties and interest thereon, whether assessed, levied
against or payable by the Lessor or otherwise, with respect to any
Vehicle or the acquisition, purchase, sale, rental, use,
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operation, control, ownership or disposition of any Vehicle or
measured in any way by the value thereof or by the business of,
investment in, or ownership by the Lessor with respect thereto and
(ii) documentary, stamp, filing, recording, mortgage or other taxes,
if any, which may be payable by the Lessor in connection with this
Agreement or the other Related Documents;
16.1.3. any violation by the relevant member of the Lessee
Group of this Agreement or of any Related Documents to which such
member of the Lessee Group is a party or by which it is bound or any
laws, rules, regulations, orders, writs, injunctions, decrees,
consents, approvals, exemptions, authorizations, licenses and
withholdings of objecting of any governmental or public body or
authority and all other requirements having the force of law
applicable at any time to any Vehicle or any action or transaction by
such member of the Lessee Group with respect thereto or pursuant to
this Agreement;
16.1.4. all-out-of-pocket costs of the Lessor (including the
fees and out-of-pocket expenses of counsel for the Lessor) in
connection with the execution, delivery and performance of this
Agreement and the other Related Documents, including, without
limitation, overhead expenses and any and all fees of the Trustee, all
fees payable in connection with any Enhancement, any and all fees of
the Servicer under the Indenture, fees payable to the Rating Agencies
and any underwriting or placement agency fees incurred in connection
with the sale of the Notes;
16.1.5. all out-of-pocket costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred by the Lessor,
the Trustee or the Noteholders in connection with the administration,
enforcement, waiver or amendment of this Agreement and any other
Related Documents and all indemnification obligations of the Lessor
under the Related Documents; and
16.1.6. all costs, fees, expenses, damages and liabilities
(including, without limitation, the fees and out-of-pocket expenses of
counsel) in connection with, or arising out of, any claim made by any
third party against the Lessor for any reason (including, without
limitation in connection with any audit or investigation conducted by
a Manufacturer under its Repurchase Program).
16.2. Reimbursement Obligation by the Lessee Group. Each member of
the Lessee Group shall forthwith upon demand reimburse the Lessor for any sum
or sums expended with respect to any of the foregoing, or shall pay such
amounts directly upon request
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from the Lessor; provided, however, that, if so requested by the relevant
member of the Lessee Group, the Lessor shall submit to such member of the
Lessee Group a statement documenting any such demand for reimbursement or
prepayment. To the extent that the relevant member of the Lessee Group in fact
indemnities the Lessor under the indemnity provisions of this Agreement, such
member of the Lessee Group shall be subrogated to the Lessor's rights in the
affected transaction and shall have a right to determine the settlement of
claims therein. The foregoing indemnity as contained in this Section 16 shall
survive the expiration or earlier termination of this Agreement or any lease of
any Vehicle hereunder.
16.3. Defense of Claims. Defense of any claim referred to in this
Section 16 for which indemnity may be required shall, at the option and request
of the Indemnified Person, be conducted by the relevant member of the Lessee
Group. The relevant member of the Lessee Group will inform the Indemnified
Person of any such claim and of the defense thereof and will provide copies of
material documents relating to any such claim or defense to such Indemnified
Person upon request. Such Indemnified Person may participate in any such
defense at its own expense provided such participation does not interfere with
the relevant member of the Lessee Group's assertion of such claim or defense.
The relevant member of the Lessee Group agrees that no Indemnified Person will
be liable to such member of the Lessee Group for any claim caused directly or
indirectly by the inadequacy of any Vehicle for any purpose or any deficiency
or defect therein or the use or maintenance thereof or any repairs, servicing
or adjustments thereto or any delay in providing or failure to provide such or
any interruption or loss of service or use thereof or any loss of business, all
of which shall be the risk and responsibility of such member of the Lessee
Group. The rights and indemnities of each Indemnified Person hereunder are
expressly made for the benefit of, and will be enforceable by, each Indemnified
Person notwithstanding the fact that such Indemnified Person is either no
longer a party to (or entitled to receive the benefits of) this Agreement, or
was not a party to (or entitled to receive the benefits of) this Agreement at
its outset. Except as otherwise set forth herein, nothing herein shall be
deemed to require the relevant member of the Lessee Group to indemnify the
Lessor for any of the Lessor's acts or omissions which constitute gross
negligence or willful misconduct. This general indemnity shall not affect any
claims of the type discussed above which the relevant member of the Lessee
Group may have against the Manufacturer.
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17. ASSIGNMENT
17.1. Right of the Lessor to Assign this Agreement. The Lessor shall
have the right to finance the acquisition and ownership of Vehicles by selling
or assigning its right, title and interest in moneys due from each Lessee and
any third party under this Agreement; provided, however, that any such sale or
assignment shall be subject to the rights and interest of the relevant Lessee
in such Vehicles, including but not limited to such Lessee's right of quiet and
peaceful possession of the Vehicles as set forth in Section 9 hereof, and under
this Agreement.
17.2. Limitations on the Right of the Lessee to Assign this
Agreement. Each Lessee shall not, except as provided in the Indenture, without
prior written consent of the Lessor and the Trustee, assign this Agreement or
any of its rights hereunder to any other party; provided, however, the relevant
Lessee may rent such vehicles under the terms of such Lessee's normal daily
rental programs. Any purported assignment in violation of this Section 17.2
shall be void and of no force or effect. Nothing contained herein shall be
deemed to restrict the right of any Lessee to acquire or dispose of, by
purchase, lease, financing, or otherwise, motor vehicles that are not subject
to the provisions of this Agreement.
18. DEFAULT AND REMEDIES THEREFOR.
18.1. Events of Default. Any one or more of the following will
constitute an event of default (a "Lease Event of Default") as that term is
used herein:
18.1.1. there occurs (i) a default in the payment of any
Monthly Base Rent and the continuance thereof for a period of five
days, (ii) a default in the payment of any Monthly Variable Rent or
Monthly Supplemental Rent and the continuance thereof for five days or
(iii) a default and continuance thereof for five Business Days after
notice thereof by the Lessor or the Trustee to the Lessee Group in the
payment of any amount payable under this Agreement (other than amounts
described in clause (i) or (ii) or above);
18.1.2. any unauthorized assignment or transfer of this
Agreement by any member of the Lessee Group occurs;
18.1.3. the failure, in any material respect, of the Lessee
Group to maintain, or cause to be maintained, insurance as required in
Section 5 or Section 31.3;
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18.1.4. subject to the provisions of Section 20 hereof
regarding Lessee Partial Wind-Down Events, the failure of the Lessee
Group to observe or perform any other material covenant, condition,
agreement or provision hereof, including, but not limited to, usage,
and maintenance, and such default continues for more than thirty (30)
days after the earlier to occur of (a) the date a Responsible Officer
of the Lessee obtains knowledge of such default or (b) the date
written notice thereof is delivered by the Lessor or the Trustee to
such Lessee; provided, however, that if such failure cannot reasonably
be cured within such thirty (30) day period, no Lease Event of Default
shall result therefrom so long as, within such thirty (30) day period,
such Lessee (i) commences to cure same, (ii) delivers written notice
to the Lessor and the Trustee notifying the Lessor and the Trustee of
such default and setting forth the steps such Lessee intends to take
in order to cure such default and (iii) thereafter diligently
prosecutes such cure to completion and completely cures such default
on or before the fiftieth (50th) day after the earlier of the dates
set forth in clause (a) and clause (b) above.
18.1.5. subject to the provisions of Section 20 hereof
regarding Lessee Partial Wind-Down Events, if any representation or
warranty made by the Lessee Group herein proves untrue in any material
respect as of the date of the issuance or making thereof and is not
cured within 30 days after notice thereof from the Lessor or the
Trustee to the Lessee Group; or
18.1.6. subject to the provisions of Section 20 hereof
regarding Lessee Partial Wind-Down Events, an Event of Bankruptcy
occurs with respect to any member of the Lessee Group.
18.1.7. a Lease Event of Default occurs under any
Non-Repurchase Vehicle Lease between the Lessor and the Lessees.
18.2. Effect of Lease Event of Default. If (i) a Lease Event of
Default described in Section 18.1.1, 18.1.2 or 18.1.6 shall occur, then the
Monthly Base Rent (calculated as if all Vehicles had become a Casualty for the
Related Month), the Monthly Variable Rent (calculated as if the full amount of
interest, principal and other charges under all outstanding Series of Notes
were then due and payable in full) and the Monthly Supplemental Rent
(calculated as if the full amount of interest, principal and other charges
under all outstanding Series of Notes were then due and payable in full) shall,
automatically, without further action by the Lessor or the Trustee, become
immediately due and payable or (ii) any other Lease Event of Default or any
Liquidation Event of Default shall
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occur, the Lessor or the Trustee may declare the Rent (calculated as described
in clause (i) above) to be due and payable, whereupon such Rent (as so
calculated) shall, subject to Section 18.5, become immediately due and payable.
18.3. Rights of Lessor Upon Lease Event of Default, Liquidation Event
of Default or Limited Liquidation Event of Default. If a Lease Event of
Default, Limited Liquidation Event of Default or Liquidation Event of Default
shall occur, then the Lessor at its option may:
(i) Proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by the Lessee Group (or such
member(s) thereof against which the Lessor determines to exercise its
remedies hereunder) of the applicable covenants and terms of this
Agreement or to recover damages for the breach hereof calculated in
accordance with Section 18.5; or
(ii) By notice in writing to the Lessee Group (or such
member(s) thereof against which the Lessor determines to exercise its
remedies hereunder) following the occurrence of a Lease Event of
Default, terminate this Agreement in its entirety (or in respect only
of the applicable member(s) thereof) and/or the right of possession
hereunder of the Lessee Group (or the applicable member(s) thereof) as
to the Vehicles, and the Lessor may direct delivery by the Lessee
Group (or the applicable member(s) thereof) of documents of title to
the Vehicles, whereupon all rights and interests of the Lessee Group
(or the applicable member(s) thereof) to the Vehicles will cease and
terminate (but the Lessee Group (or the applicable member(s) thereof)
will remain liable hereunder as herein provided, however, the Lessee
Group's liability will be calculated in accordance with Section 18.5);
and thereupon, the Lessor or its agents may peaceably enter upon the
premises of the applicable Lessee(s) or other premises where the
Vehicles may be located and take possession of them and thenceforth
hold, possess and enjoy the same free from any right of the Lessee
Group (or the applicable member(s) thereof), or their successors or
assigns, to use the Vehicles for any purpose whatsoever, and the
Lessor will, nevertheless, have a right to recover from the Lessee
Group (or the applicable member(s) thereof) any and all amounts which
under the terms of Section 18.2 (as limited by Section 18.5) of this
Agreement may be then due. The Lessor will provide the Lessee Group
(or the applicable member(s) thereof) with written notice of the place
and time of the sale at least five days prior to the proposed sale,
which shall be deemed commercially reasonable, and any Lessee may
purchase the Vehicle(s) at the sale. Each and every power and remedy
hereby specifically given to the
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Lessor will be in addition to every other power and remedy hereby
specifically given or now or hereafter existing at law, in equity or
in bankruptcy and each and every power and remedy may be exercised
from time to time and simultaneously and as often and in such order as
may be deemed expedient by the Lessor; provided, however, that the
measure of damages recoverable against the Lessees will in any case be
calculated in accordance with Section 18.5. All such powers and
remedies will be cumulative, and the exercise of one will not be
deemed a waiver of the right to exercise any other or others. No
delay or omission of the Lessor in the exercise of any such power or
remedy and no renewal or extension of any payments due hereunder will
impair any such power or remedy or will be construed to be a waiver of
any default or any acquiescence therein. Any extension of time for
payment hereunder or other indulgence duly granted to the Lessee Group
(or the applicable member(s) thereof) will not otherwise alter or
affect the Lessor's rights or the obligations hereunder of the Lessee
Group (or the applicable member(s) thereof). The Lessor's acceptance
of any payment after it will have become due hereunder will not be
deemed to alter or affect the Lessor's rights hereunder with respect
to any subsequent payments or defaults therein; or
(iii) By notice in writing to the Lessee Group (or such
member(s) thereof against which the Lessor determines to exercise its
remedies hereunder), terminate the Power of Attorney.
18.4. Rights of Trustee Upon Liquidation Event of Default, Limited
Liquidation Event of Default and Non-Performance of Certain Covenants.
(i) If a Liquidation Event of Default, a Limited Liquidation
Event of Default or Manufacturer Event of Default shall have occurred
and be continuing, the Lessor and the Trustee, to the extent provided
in the Indenture, shall have the rights against the Guarantor, each
Lessee, each Manufacturer and the Collateral provided in the Indenture
(including, without limitation, the rights granted under Section 9.3
of the Indenture) upon a Liquidation Event of Default or Limited
Liquidation Event of Default, including the right to take possession
of all Vehicles immediately from the Lessees.
(ii) If the Guarantor or any Lessee shall default in the due
performance and observance of any of its obligations under Section
31.3, 31.4, 31.5(iv), 31.8, 32.3 or 32.4 hereof, and such default
shall continue unremedied for a period of 30 days after notice thereof
shall have been given to the Guarantor by the Lessor, the Lessor or
the Trustee,
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as assignee of the Lessor's rights hereunder, shall have the ability
to exercise all rights, remedies, powers, privileges and claims of the
Guarantor or any Lessee against the Manufacturers under or in
connection with the Repurchase Programs with respect to (i) Vehicles
the Guarantor or any Lessee has determined to turn back to the
Manufacturers under such Repurchase Programs and (ii) whether or not
the Guarantor or any Lessee shall then have determined to turn back
such Vehicles, any Vehicles for which the applicable Repurchase Period
will end within one week or less.
(iii) Upon a default in the performance (after giving effect
to any grace periods provided herein) by the Guarantor or any Lessee
of its obligations hereunder to keep the Vehicles free of Liens and to
maintain the Trustee's Lien perfected on the Collateral, the Trustee
shall have the right to take actions reasonably necessary to correct
such default with respect to the subject Vehicles including the
execution of UCC financing statements with respect to Repurchase
Programs and other general intangibles and the completion of Vehicle
Perfection and Documentation Requirements on behalf of the Guarantor
or the Lessee as applicable.
(iv) Upon the occurrence of a Liquidation Event of Default or
Limited Liquidation Event of Default, the Guarantor and each Lessee
will return any Vehicles to the related Manufacturer in accordance
with the instructions of the Lessor. To the extent any Manufacturer
fails to accept any such Vehicles under the terms of the applicable
Repurchase Program, the Lessor shall have the right to otherwise
dispose of such Vehicles and to direct the Guarantor or the applicable
Lessee to dispose of such Vehicles in accordance with its
instructions. In addition, the Lessor shall have all of the rights,
remedies, powers, privileges and claims vis-a-vis the Guarantor or any
Lessee, necessary or desirable to allow the Trustee to exercise the
rights, remedies, powers, privileges and claims given to the Trustee
pursuant to Sections 9.2 and 9.3 of the Base Indenture and the
Guarantor and each Lessee acknowledges that it has hereby granted to
the Lessor all of the rights, remedies, powers, privileges and claims
granted to the Trustee pursuant to Article 9 of the Base Indenture and
that, under certain circumstances set forth in the Base Indenture, the
Trustee may act in lieu of the Lessor in the exercise of such rights,
remedies, powers, privileges and claims.
18.5. Measure of Damages. If a Lease Event of Default, Liquidation
Event of Default or Limited Liquidation Event of Default occurs and the Lessor
or the Trustee exercises the
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remedies granted to the Lessor or the Trustee under this Article 18, the amount
that the Lessor shall be permitted to recover shall be equal to:
(i) all Rent under this Agreement (calculated as provided in
Section 18.2) plus
(ii) any damages and expenses, including reasonable
attorneys' fees and expenses (and including net after-tax losses of
federal and state income tax benefits to which the Lessor would
otherwise be entitled under this Agreement), which the Lessor or the
Trustee will have sustained by reason of the Lease Event of Default,
Liquidation Event of Default or Limited Liquidation Event of Default,
together with reasonable sums for such attorneys' fees and such
expenses as will be expended or incurred in the seizure, storage,
rental or sale of the Vehicles or in the enforcement of any right or
privilege hereunder or in any consultation or action in such
connection; plus
(iii) all other amounts due and payable under this Agreement;
plus
(iv) interest on amounts due and unpaid under this Agreement
at the VFR plus 1% from time to time computed from the date of the
Lease Event of Default, Liquidation Event of Default or Limited
Liquidation Event of Default or the date payments were originally due
the Lessor under this Agreement or from the date of each expenditure
by the Lessor which is recoverable from the Lessees pursuant to this
Section 18, as applicable, to and including the date payments are made
by the Lessees; minus
(v) an amount equal to all sums realized by the Lessor or the
Trustee from the liquidation of the Vehicles leased hereunder (either
by receipt of payment from the Manufacturers under Repurchase
Programs, from sales of Vehicles to third parties, or otherwise),
provided, however, if an Eligible Vehicle is turned back to the
Manufacturer under the applicable Repurchase Program and accepted for
repurchase by such Manufacturer (as evidenced by a Condition Report
indicating that such Vehicle conforms to the requirements for
repurchase under such Repurchase Program) the Lessor and the Trustee
shall be deemed to have received on account of this clause (y) an
amount equal to the Net Book Value of such Vehicle (less (a) any
Termination Payments and (b) Repurchase Price Interest (calculated
assuming that payment of the Repurchase Price will be received on the
60th day after the Turnback Date)) payable in respect of such
Vehicle).
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18.6. Application of Proceeds. The proceeds of any sale or other
disposition pursuant to Section 18.2 or 18.3 shall be applied in the following
order: (i) to the reasonable costs and expenses incurred by the Lessor in
connection with such sale or disposition, including any reasonable costs
associated with repairing any Vehicles, and reasonable attorneys' fees in
connection with the enforcement of this Agreement, (ii) to the payment of
outstanding Rent (such payments to be applied first to outstanding Variable
Rent, then to outstanding Supplemental Rent and then to outstanding Base Rent),
(iii) to the payment of all other amounts due hereunder, and (iv) any remaining
amounts to the Lessor, or such Person(s) as may be lawfully entitled thereto.
19. MANUFACTURER EVENTS OF DEFAULT. Upon the occurrence of any of
the following events (each, a "Manufacturer Event of Default") with respect to
any Manufacturer (subject to the provisions of Section 21 hereof regarding
Eligibility Waiver Events), the relevant Lessee on behalf of the Lessor (a)
shall no longer place Vehicle Orders for additional Vehicles from such
Manufacturer (each, a "Defaulting Manufacturer") and (b) shall cancel any
Vehicle Order with such Defaulting Manufacturer to which a VIN has not been
assigned as of the date such Manufacturer Event of Default occurs:
19.1. The failure of such Manufacturer to pay any amount when due
pursuant to the related Repurchase Program with respect to a Vehicle turned in
to such Manufacturer; provided, however, that such failure continues for more
than ninety (90) days following the Turnback Date such that the aggregate of
any such amounts not paid are in the aggregate in excess of $2,000,000 net of
amounts that are the subject of a good faith dispute as evidenced in writing by
either a member of the Lessee Group or the Manufacturer questioning the
accuracy of the amounts paid or payable in respect of certain Vehicles tendered
for repurchase under a Repurchase Program.
19.2. The termination of such Manufacturer's Repurchase Program
(subject to the provisions of Section 21 hereof regarding Eligibility Waiver
Events).
19.3. The occurrence of an Event of Bankruptcy with respect to such
Manufacturer.
19.4. Such Manufacturer is no longer an Eligible Manufacturer or the
Repurchase Program of such Manufacturer shall no longer be an Eligible
Repurchase Program (subject, in each case, to the provisions of Section 21
hereof regarding Eligibility Waiver Events).
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20. LESSEE PARTIAL WIND-DOWN EVENTS. Upon the occurrence of any of
the events described in Sections 18.1.4, 18.1.5, or 18.1.6 with respect to any
member (such member, the "Defaulting Lessee") of the Lessee Group other than
the Guarantor (a "Lessee Partial Wind-Down Event"), then such Defaulting Lessee
shall (a) no longer place Vehicle Orders for additional Vehicles from any
Manufacturer and (b) shall cancel vehicle Orders for Vehicles to which a VIN
has not been assigned by the Manufacturer as of the date such Lessee Partial
Wind-Down Event occurs. In the case of a Lessee Partial Wind-Down Event, the
Lessor may (i) exercise any right or remedy in respect only of such Defaulting
Lessee provided for pursuant to the provisions of Section 18.3 or 18.4 hereof
and (ii) terminate the Power of Attorney with respect to such Defaulting
Lessee; provided, however, if and for so long as no Lease Event of Default
shall have occurred (other than the Lease Event of Default that caused such
Lessee Partial Wind-Down Event), the Lessor shall not exercise any such remedy
or terminate such Power of Attorney in respect of any Lessee (other than the
Defaulting Lessee) solely as a result of such Lessee Partial Wind-Down Event.
21. ELIGIBILITY WAIVER EVENTS. In the event that a Manufacturer
Event of Default occurs by reason of an event stated in Section 19.2 or 19.4 (a
"Manufacturer Wind-Down Event"), then if (i) the Series Supplement for any
Series of Notes outstanding under the Indenture provides for the right of all
or less than all of the Noteholders to waive such Manufacturer Wind-Down Event
and (ii) the Requisite Noteholders in respect of any Series of Notes waives
such Manufacturer Wind-Down Event, the Lessees may continue to place Vehicle
Orders for the purchase of Vehicles from such Defaulting Manufacturer through
this Agreement; provided, however, the total Net Book Value of all Vehicles
leased hereunder through any Defaulting Manufacturer shall not exceed the
Maximum Defaulting Manufacturer Percentage of the Net Book Value of all
Vehicles leased under this Agreement. Any such waiver by any such Requisite
Noteholders shall be referred to as an "Eligibility Waiver Event".
22. CERTIFICATION OF TRADE OR BUSINESS USE. Each Lessee hereby
warrants and certifies, under penalties of perjury, that (1) such Lessee
intends that more than 50 percent of the use of the Vehicles listed on the
Supplemental Document(s), attached hereto and made a part hereof, which are
subject to this Agreement, are to be used in a trade or business of such
Lessee, and (2) such Lessee has been advised that it will not be treated as the
owner of the Vehicle(s) for federal income tax purposes.
23. SURVIVAL. In the event that, during the term of this Agreement,
any member of the Lessee Group becomes liable for the payment or reimbursement
of any obligations, claims or taxes pursuant to any provision hereof, such
liability will continue,
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notwithstanding the expiration or termination of this Agreement, until all such
amounts are paid or reimbursed by such Lessee.
24. ADDITIONAL LESSEES. Any direct or indirect Subsidiary of the
Guarantor (each, a "Guarantor Subsidiary") shall have the right to become a
"Lessee" under and pursuant to the terms of this Agreement by complying with
the provisions of this Section 24. In the event a Guarantor Subsidiary desires
to become a "Lessee" under this Agreement, then the Guarantor and such
Guarantor Subsidiary shall execute (if appropriate) and deliver to the Lessor
and the Trustee:
(i) a Joinder in Lease Agreement in the form attached hereto
as Attachment C (each, a "Joinder in Lease");
(ii) the certificate of incorporation for such Guarantor
Subsidiary, duly certified by the Secretary of State of the
jurisdiction of such Guarantor Subsidiary's incorporation, together
with a copy of the by-laws of such Subsidiary Guarantor, duly
certified by a Secretary or Assistant Secretary of such Guarantor
Subsidiary;
(iii) copies of resolutions of the Board of Directors of such
Guarantor Subsidiary authorizing or ratifying the execution, delivery
and performance, respectively, of those documents and matters required
of it with respect to this Agreement, duly certified by the Secretary
or Assistant Secretary of such Guarantor Subsidiary;
(iv) a certificate of the Secretary or Assistant Secretary of
such Guarantor Subsidiary certifying the names of the individual or
individuals authorized to sign the Joinder in Lease Agreement and the
other Related Documents to be executed by it, together with samples of
the true signatures of each such individual;
(v) a good standing certificate for such Guarantor Subsidiary
in the jurisdiction of its incorporation and the jurisdiction of its
principal place of business;
(vi) a written search report from a Person satisfactory to
the Lessor and the Trustee listing all effective financing statements
that name such Guarantor Subsidiary as debtor or assignor, and that
are filed in the jurisdictions in which filings were made pursuant to
clause (vii) below, together with copies of such financing statements,
and tax and judgment lien search reports from a Person satisfactory to
the Lessor and the Trustee showing no evidence of liens filed against
such Guarantor Subsidiary that purport to affect any Vehicles to be
leased hereunder or any Collateral under the Indenture;
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(vii) evidence of the filing of proper financing statements
on Form UCC-1 naming such Guarantor Subsidiary, as debtor, and the
Lessor as secured party covering the collateral described in Section
2(b) hereof;
(viii) an Officer's Certificate and an opinion of counsel
each stating that such joinder by such Guarantor Subsidiary complies
with this Section 24 and that all conditions precedent herein provided
for relating to such transaction have been complied with;
(ix) a statement from each of the Rating Agencies that such
Guarantor Subsidiary becoming a "Lessee" under this Agreement will not
cause a failure to meet the Rating Agency Condition; and
(x) any additional documentation that the Lessor or the
Trustee may require to evidence the assumption by such Guarantor
Subsidiary of the obligations and liabilities set forth in this
Agreement.
Upon satisfaction of the foregoing conditions and receipt by such Guarantor
Subsidiary of the applicable Joinder in Lease executed by the Lessor, such
Guarantor Subsidiary shall for all purposes be deemed to be a "Lessee" for
purposes of this Agreement and shall be entitled to the benefits and subject to
the liabilities and obligations of a Lessee hereunder.
25. TITLE. This is an agreement to lease only and title to Vehicles
will at all times remain in the Lessor's name. No member of the Lessee Group
will have any rights or interest in Vehicles whatsoever other than the right of
possession and use as provided by this Agreement.
26. GUARANTY.
26.1. Guaranty. In order to induce the Lessor to execute and deliver
this Agreement and to lease Vehicles to the Lessees, and in consideration
thereof, the Guarantor hereby (i) unconditionally and irrevocably guarantees to
the Lessor the obligations of the Lessees to make any payments required to be
made by them under this Agreement, (ii) agrees to cause the Lessees to duly and
punctually perform and observe all of the terms, conditions, covenants,
agreements and indemnities of the Lessees under this Agreement, and (iii)
agrees that, if for any reason whatsoever, any Lessee fails to so perform and
observe such terms, conditions, covenants, agreements and indemnities, the
Guarantor will duly and punctually perform and observe the same (the
obligations referred to in clauses (i) through (iii) above are collectively
referred to as the "Guaranteed Obligations"). The liabilities and obligations
of the Guarantor
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under the guaranty contained in this Section 26 (this "Guaranty") will be
absolute and unconditional under all circumstances. This Guaranty shall be a
guaranty of payment and not of collection, and the Guarantor hereby agrees that
it shall not be required that the Lessor or the Trustee assert or enforce any
rights against any of the Lessees or any other person before or as a condition
to the obligations of the Guarantor pursuant to this Guaranty.
26.2. Scope of Guarantor's Liability. The Guarantor's obligations
hereunder are independent of the obligations of the Lessees, any other
guarantor or any other Person, and the Lessor may enforce any of its rights
hereunder independently of any other right or remedy that the Lessor may at any
time hold with respect to this Agreement or any security or other guaranty
therefor. Without limiting the generality of the foregoing, the Lessor may
bring a separate action against the Guarantor without first proceeding against
any of the Lessees, any other guarantor or any other Person, or any security
held by the Lessor, and regardless of whether the Lessees or any other
guarantor or any other Person is joined in any such action. The Guarantor's
liability hereunder shall at all times remain effective with respect to the
full amount due from the Lessees hereunder, notwithstanding any limitations on
the liability of the Lessees to the Lessor contained in any of the Related
Documents or elsewhere. The Lessor's rights hereunder shall not be exhausted
by any action taken by the Lessor until all Guaranteed obligations have been
fully paid and performed. The liability of the Guarantor hereunder shall be
reinstated and revived, and the rights of the Lessor shall continue, with
respect to any amount at any time paid on account of the Guaranteed Obligations
which shall thereafter be required to be restored or returned by the Lessor
upon the bankruptcy, insolvency or reorganization of any of the Lessees, any
other guarantor or any other Person, or otherwise, all as though such amount
had not been paid.
26.3. Lessor's Right to Amend this Agreement, Etc. The Guarantor
authorizes the Lessor, at any time and from time to time without notice and
without affecting the liability of the Guarantor hereunder, to: (a) alter the
terms of all or any part of the Guaranteed Obligations and any security and
guaranties therefor including without limitation modification of times for
payment and rates of interest; (b) accept new or additional instruments,
documents, agreements, security or guaranties in connection with all or any
part of the Guaranteed Obligations; (c) accept partial payments on the
Guaranteed Obligations; (d) waive, release, reconvey, terminate, abandon,
subordinate, exchange, substitute, transfer, compound, compromise, liquidate
and enforce all or any part of the Guaranteed Obligations and any security or
guaranties therefor, and apply any such security and direct the order or manner
of sale thereof (and bid and purchase
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38
at any such sale), as the Lessor in its discretion may determine; (e) release
any Lessee, any guarantor or any other Person from any personal liability with
respect to all or any part of the Guaranteed Obligations; and (f) assign its
rights under this Guaranty in whole or in part.
26.4. Waiver of Certain Rights by Guarantor. The Guarantor hereby
waives each of the following to the fullest extent allowed by law:
(a) all statutes of limitation as a defense to any action
brought by the Lessor against the Guarantor;
(b) any defense based upon:
(i) the unenforceability or invalidity of all or
any part of the Guaranteed Obligations or any security or
other guaranty for the Guaranteed Obligations or the lack of
perfection or failure of priority of any security for the
Guaranteed Obligations; or
(ii) any act or omission of the Lessor or any other
Person that directly or indirectly results in the discharge or
release of any of the Lessees or any other Person or any of
the Guaranteed Obligations or any security therefor; or
(iii) any disability or any other defense of any
Lessee or any other Person with respect to the Guaranteed
Obligations, whether consensual or arising by operation of law
or any bankruptcy, insolvency or debtor-relief proceeding, or
from any other cause;
(c) any right (whether now or hereafter existing) to
require the Lessor, as a condition to the enforcement of this
Guaranty, to:
(i) accelerate the Guaranteed Obligations;
(ii) give notice to the Guarantor of the terms, time
and place of any public or private sale of any security for
the Guaranteed Obligations; or
(iii) proceed against any Lessee, any other
guarantor or any other Person, or proceed against or exhaust
any security for the Guaranteed Obligations.
(d) all rights of subrogation, all rights to enforce any
remedy that the Lessor now or hereafter has against any Lessee or any
other Person, and any benefit of, and right to
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participate in, any security now or hereafter held by the Lessor with
respect to the Guaranteed Obligations;
(e) presentment, demand, protest and notice of any
kind,including without limitation notices of default and notice of
acceptance of this Guaranty;
(f) all suretyship defenses and rights of every nature
otherwise available under New York law and the laws of any other
jurisdiction; and
(g) all other rights and defenses the assertion or exercise
of which would in any way diminish the liability of the Guarantor
hereunder.
26.5. Lessees' Obligations to Guarantor and Guarantor's
Obligations to Lessees Subordinated. Until all of the Guaranteed Obligations
have been paid in full, the Guarantor agrees that all existing and future
debts, obligations and liabilities of the Lessees to the Guarantor or the
Guarantor to any of the Lessees (hereinafter collectively referred to as
"Subordinated Debt") shall be and hereby are expressly subordinated to the
Guaranteed Obligations on the terms set forth in clauses (a) through (e) below,
and the payment thereof is expressly deferred in right of payment to the prior
payment in full of the Guaranteed Obligations. For purposes of this Section
26.5, to the extent the Guaranteed Obligations consist of the obligation to pay
money, the Guaranteed Obligations shall not be deemed paid in full unless and
until paid in full in cash.
(a) Upon any distribution of assets of the Guarantor or any
Lessee upon any dissolution, winding up, liquidation or reorganization
of such Lessee, whether in bankruptcy, insolvency, reorganization or
receivership proceedings, or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of
the Guarantor or such Lessee, or otherwise:
(i) the holders of the Guaranteed Obligations
shall be entitled to receive payment in full of the Guaranteed
Obligations before the Guarantor or the Lessee, as the case
may be, is entitled to receive any payment on account of the
Subordinated Debt;
(ii) any payment by, or distribution of assets of,
the Guarantor or such Lessee of any kind of character, whether
in cash, property or securities, to which such Lessee or the
Guarantor would be entitled except for this subordination
shall be paid or delivered by the Person making such payment
or distribution, whether a trustee in bankruptcy, a
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receiver or liquidating trustee, or otherwise, directly to the holders
of the Guaranteed Obligations to be held as additional security for
the Guaranteed Obligations in an interest bearing account until the
Guaranteed Obligations have been paid in full; and
(iii) if, notwithstanding the foregoing, any payment
by, or distribution of assets of, the Guarantor or such Lessee
of any kind or character, whether in cash, property or
securities, in respect of any Subordinated Debt shall be
received by such Lessee or the Guarantor before the Guaranteed
Obligations are paid in full, such payment or distribution
shall be held in trust and immediately paid over in kind to
the holders of the Guaranteed Obligations in an interest
bearing account until the Guaranteed Obligations have been
paid in full.
(b) The Guarantor authorizes and directs each Lessee and each
Lessee authorizes and directs the Guarantor to take such action as may
be necessary or appropriate to effectuate and maintain the
subordination provided herein.
(c) No right of any holder of the Guaranteed Obligations to
enforce the subordination herein shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the
Guarantor, any Lessee, the Lessor or any other Person or by any
noncompliance by the Guarantor, any Lessee, the Lessor or any other
Person with the terms, provisions and covenants hereof or of the
Related Documents regardless of any knowledge thereof that any such
holder of the Guaranteed Obligations may have or be otherwise charged
with.
(d) Nothing express or implied herein shall give any Person
other than the Lessees, the Lessor, the Trustee and the Guarantor any
benefit or any legal or equitable right, remedy or claim hereunder.
(e) If the Guarantor shall institute or participate in any
suit, action or proceeding against any Lessee or any Lessee shall
institute or participate in any suit, action or proceeding against the
Guarantor, in violation of the terms hereof, such Lessee or the
Guarantor, as the case may be, may interpose as a defense or dilatory
plea this subordination, and the holders of the Guaranteed Obligations
are irrevocably authorized to intervene and to interpose such defense
or plea in their name or in such Lessee's or the Guarantor's, as the
case may be, name.
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26.6. Guarantor to Pay Lessor's Expenses. The Guarantor agrees to
pay to the Lessor, on demand, all costs and expenses, including attorneys' and
other professional and paraprofessional fees, incurred by the Lessor in
exercising any right, power or remedy conferred by this Guaranty, or in the
enforcement of this Guaranty, whether or not any action is filed in connection
therewith. Until paid to the Lessor, such amounts shall bear interest,
commencing with the Lessor's demand therefor, at the VFR plus 1%.
26.7. Reinstatement. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time payment of any of the amounts
payable by any Lessee under this Agreement is rescinded or must otherwise be
restored or returned by the Lessor, upon an event of bankruptcy, dissolution,
liquidation or reorganization of any member of the Lessee Group or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, any member of the Lessee Group or any
substantial part of their respective property, or otherwise, all as though such
payment had not been made.
26.8. Pari Passu Indebtedness. The Guarantor (i) represents and
warrants that, as of the date hereof, the obligations of the Guarantor under
this Guaranty will rank pari passu with any existing unsecured indebtedness of
the Guarantor and (ii) covenants and agrees that from and after the date hereof
the obligations of the Guarantor under this Guaranty will rank pari passu with
any unsecured indebtedness of the Guarantor incurred after the date hereof.
27. RIGHTS OF LESSOR ASSIGNED TO TRUSTEE. Notwithstanding anything
to the contrary contained in this Agreement, each member of the Lessee Group
acknowledges that the Lessor has assigned all of its rights under this
Agreement to the Trustee. Accordingly, each member of the Lessee Group agrees
that:
(i) Subject to the terms of the Indenture, the Trustee shall
have all the rights, powers, privileges and remedies of the Lessor
hereunder and the Guarantor's and the relevant Lessee's obligations
hereunder shall not be subject to any claim or defense which the
Guarantor or such Lessee may have against the Lessor (other than the
defense of payment actually made). Specifically, each member of the
Lessee Group agrees that, upon the occurrence of an Amortization Event
or, subject to the provisions of Section 20 hereof, a Lessee Partial
Wind-Down Event or, subject to the provisions of Section 19 hereof, a
Manufacturer Event of Default, the Trustee may exercise (for and on
behalf of the Lessor) any right or remedy against any member of the
Lessee Group provided for herein and no member of the Lessee Group
will
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42
interpose as a defense that such claim should have been asserted by
the Lessor;
(ii) Upon the delivery by the Trustee of any notice to any
member of the Lessee Group stating that a Manufacturer Event of
Default, an Amortization Event or Lessee Partial Wind-Down Event with
respect to such Lessee has occurred, then such member of the Lessee
Group, will, if so requested by the Trustee, treat the Trustee or the
Trustee's designee for all purposes as the lessor hereunder and in all
respects comply with all obligations under this Agreement that are
asserted by the Trustee as the successor to the Lessor hereunder,
irrespective of whether such member of the Lessee Group has received
any such notice from the Lessor; provided, however, the Trustee, shall
in no event be liable to any Lessee for any action taken by it in its
capacity as successor to the Lessor other than actions that constitute
negligence or willful misconduct;
(iii) Each member of the Lessee Group acknowledges that
pursuant to the Indenture the Lessor has irrevocably authorized and
directed such member of the Lessee Group to, and each such member of
the Lessee Group shall, make payments of Rent hereunder (and any other
payments hereunder) directly to the Trustee for deposit in the
Collection Account established by the Trustee for receipt of such
payments pursuant to the Indenture and such payments shall discharge
the obligation of such member of the Lessee Group to the Lessor
hereunder to the extent of such payments. Upon written notice to the
relevant member of the Lessee Group of a sale or assignment by the
Trustee of its right, title and interest in moneys due under this
Agreement to a successor Trustee, such member of the Lessee Group
shall thereafter make payments of all Rent (and any other payments
hereunder) to the party specified in such notice;
(iv) Upon request made by the Trustee at any time, each
member of the Lessee Group will take such actions as are requested by
the Trustee to assist the Trustee in maintaining the Trustee's
perfected security interest in the Vehicles leased under this
Agreement, the Certificates of Title with respect thereto, the
Collateral pursuant to the Indenture and the collateral granted to the
Lessor pursuant to Section 2(b) (such grant of collateral to be
effective as of the date of this Agreement, but only in the event that
this Agreement is recharacterized as described in such Section 2(b));
and
(v) This Agreement has been assigned by the Lessor to the
Trustee pursuant to the Indenture as collateral security only for all
Series of Notes that do not provide for
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43
segregated collateral and, accordingly, all references herein to "all"
Series of Notes shall refer only to all Series of Notes that do not
provide for segregated collateral.
28. RIGHT OF LESSEE TO DELEGATE RIGHTS AND OBLIGATIONS HEREUNDER TO
GUARANTOR. If and for so long as the Guarantor is acting as the Servicer under
the Indenture, any Lessee shall be permitted to delegate to the Guarantor
(acting in such capacity) its rights and obligations under this Agreement,
including, without limitation, its rights and obligations under Sections 10 and
11 hereof. No such delegation of rights or obligations shall, however, operate
in any manner to release any such delegating Lessee from any of its obligations
under this Agreement.
29. MODIFICATION AND SEVERABILITY. The terms of this Agreement will
not be waived, altered, modified, amended, supplemented or terminated in any
manner whatsoever except by written instrument signed by the Lessor and each
Lessee and consented to in writing by the Trustee. If any part of this
Agreement is not valid or enforceable according to law, all other parts will
remain enforceable. The Lessor shall provide prompt written notice to each
Rating Agency of any such waiver, modification or amendment.
30. CERTAIN REPRESENTATIONS AND WARRANTIES. Each Lessee represents
and warrants to the Lessor and the Trustee as to itself and as to each other
Lessee, and the Guarantor represents and warrants to the Lessor and the Trustee
as to itself and as to each Lessee, that as of the Closing Date with respect to
the first Series of Notes:
30.1. Due Organization, Authorization, etc. The Guarantor and each
Lessee is a corporation duly organized and validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified and in good standing in each jurisdiction where, because of the
nature of its activities or properties, the failure so to qualify would have a
Material Adverse Effect on such Lessee or the Guarantor, as applicable. The
execution, delivery and performance by the Guarantor and each Lessee of this
Agreement and the other Related Documents to be executed and delivered by it
are within its corporate powers, have been duly authorized by all necessary
corporate action (including, without limitation, shareholder approval, if
required), have received all necessary governmental and other consents and
approvals (if any shall be required), and do not and will not contravene or
conflict with, or create a default, breach, Lien or right of termination or
acceleration under, any Requirement of Law or Contractual Obligation binding
upon it, other than such default, breach, Lien or right of
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44
termination or acceleration which does not have a Material Adverse Effect on
the Guarantor or such Lessee, as applicable. This Agreement and each other
Related Document to be executed and delivered by it are (or when executed and
delivered will be) the legal, valid, and binding obligations of the Guarantor
or such Lessee, enforceable against the Guarantor or such Lessee, as the case
may be, in accordance with their respective terms, subject to bankruptcy,
insolvency and other laws affecting the enforcement of creditors' rights. Each
Lessee is a direct or indirect Subsidiary of the Guarantor.
30.2. Financial Information; Financial Condition. All balance
sheets, all statements of operations, of stockholders' equity and of cash flow,
and other financial data (other than projections and the financial statements
referred to in clause (b) below) which have been or shall hereafter be
furnished to the Lessor or the Trustee for the purposes of or in connection
with this Agreement or the Related Documents have been and will be prepared in
accordance with GAAP and do and will present fairly the financial condition of
the entities involved as of the dates thereof and the results of their
operations for the periods covered thereby. Such financial data include the
following financial statements and reports which have been furnished to the
Lessor and the Trustee on or prior to such Closing Date:
(a) the audited combined balance sheet of "Team Rental Group"
as of December 31, 1993 and the related statements of operations,
stockholders' deficit and cash flows for the fiscal year ending on
such date; and
(b) the unaudited pro forma consolidated balance sheets of
the Guarantor and the Lessees and statement of operations, accompanied
by an Officer's Certificate verifying the accuracy and completeness
thereof signed by an Authorized Officer of the Guarantor, for the 3
month period ending March 31, 1994.
30.3. Litigation. Except for claims which are fully covered by
insurance, no claims, litigation (including, without limitation, derivative
actions), arbitration, governmental investigation or proceeding or inquiry is
pending or, to the best of the Guarantor's or such Lessee's knowledge,
threatened against the Guarantor or any Lessee which would, if adversely
determined, have a Material Adverse Effect on the Guarantor or such Lessee, as
applicable.
30.4. Liens. The Vehicles are free and clear of all Liens other than
(i) Permitted Liens, (ii) Liens in favor of the Trustee, and (iii) during only
the period commencing on such Closing Date and expiring on the date 60 days
thereafter, Liens in favor of lenders to the Lessor that have been paid in
full.
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The Trustee has obtained, and will continue to obtain, as security for the
liabilities under the Indenture and the Notes, a first priority perfected Lien
on all Vehicles leased under this Agreement. Except as otherwise permitted
under the Indenture, all Vehicle Perfection and Documentation Requirements with
respect to all Vehicles on or after the date hereof have and will continue to
be satisfied.
30.5. Employee Benefit Plans. (a) During the twelve consecutive
month period prior to such Closing Date: (i) no steps have been taken by the
Guarantor or any Lessee to terminate any Pension Plan and (ii) no contribution
failure has occurred with respect to any Pension Plan sufficient to give rise
to a Lien under Section 302(f)(1) of ERISA in connection with such Pension
Plan; (b) no condition exists or event or transaction has occurred with respect
to any Pension Plan which could result in the incurrence by the Guarantor or
any Lessee or any member of the Controlled Group of fines, penalties or
liabilities for ERISA violations, which in the case of any of the events
referred to in clause (a) above or this clause (b) would have a Material
Adverse Effect upon the Guarantor or such Lessee, as applicable, and (c)
neither the Guarantor nor any Lessee has any material contingent liability with
respect to any post-retirement benefits under a Welfare Plan, other than
liability for continuation coverage described in Subtitle B of Part 6 of Title
I of ERISA and liabilities which would not have a Material Adverse Effect upon
the Guarantor or such Lessee, as applicable.
30.6. Investment Company Act. Neither the Guarantor nor any Lessee
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
30.7. Regulations G, U and X. Neither the Guarantor nor any Lessee
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, U and X of the Board of Governors of the
Federal Reserve System).
30.8. Business Locations: Trade Names: Principal Places of Business
Locations. Schedule 30.8 lists each of the locations where each Lessee and the
Guarantor maintains a chief executive office, principal place of business, or
any records; and Schedule 30.8 also lists each Lessee's and the Guarantor's
legal name, each name under or by which each Lessee and the Guarantor conducts
its business, each state in which each Lessee and the Guarantor conducts
business and each state in which each Lessee and the Guarantor has its
principal place of business.
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46
30.9. Taxes. Each of the Guarantor and each Lessee has filed all tax
returns that are required to be filed by it, and has paid or provided adequate
reserves for the payment of all taxes, including, without limitation, all
payroll taxes and federal and state withholding taxes, and all assessments
payable by it that have become due, other than those that are not yet
delinquent or are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP. As of the Closing Date, there is no
ongoing material audit (other than routine sales tax audits and other routine
audits) or, to the Guarantor's or any Lessee's knowledge, material tax
liability for any period for which returns have been filed or were due other
than those contested in good faith by appropriate proceedings and with respect
to which adequate reserves have been established and are being maintained in
accordance with GAAP.
30.10. Governmental Authorization. The Guarantor and each Lessee has
all licenses, franchises, permits and other governmental authorizations
necessary for all businesses presently carried on by it (including owning and
leasing the real and personal property owned and leased by it), except where
failure to obtain such licenses, franchises, permits and other governmental
authorizes would not have a Material Adverse Effect on the Guarantor or such
Lessee, as applicable.
30.11. Compliance with Laws. The Guarantor and each
Lessee: (i) is not in violation of any Requirement of Law, which violation
would have a Material Adverse Effect on the Guarantor or such Lessee, as
applicable, and to the best knowledge of the Guarantor and the Lessees, no such
violation has been alleged, (ii) has filed in a timely manner all reports,
documents and other materials required to be filed by it with any Governmental
Agency (and the information contained in each of such filings is true, correct
and complete in all material respects), except where failure to make such
filings would not have a Material Adverse Effect on the Guarantor or such
Lessee, as applicable, and (iii) has retained all records and documents
required to be retained by it pursuant to any Requirement of Law, except where
failure to retain such records would not have a Material Adverse Effect on the
Guarantor or such Lessee, as applicable.
30.12. Eligible Vehicles. Each Vehicle is or will be, as the case
may be, on the Vehicle Lease Commencement Date with respect to such Vehicle, an
Eligible Vehicle (subject to the provisions of Section 21 hereof regarding
Eligibility Waiver Requirements).
30.13. Supplemental Documents True and Correct. All information
contained in any Vehicle Order or other Supplemental Document which has been
submitted, or which may hereafter be
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47
submitted by a Lessee to the Lessor is, or will be, true, correct and complete.
Each of the foregoing representations and warranties will be deemed to
be remade as of the Closing Date with respect to each Series of Notes.
31. CERTAIN AFFIRMATIVE COVENANTS. Each Lessee covenants and agrees
as to itself and as to each other Lessee, and the Guarantor covenants and
agrees as to itself and as to each Lessee that, until the expiration or
termination of this Agreement, and thereafter until the obligations of such
Lessee or the Guarantor under this Agreement and the Related Documents are
satisfied in full, unless at any time the Lessor and the Trustee shall
otherwise expressly consent in writing, it will (and, in the case of the
Guarantor, will cause each Lessee to):
31.1. Corporate Existence: Foreign Qualification. Do and cause to be
done at all times all things necessary to (i) maintain and preserve the
corporate existence of the Guarantor and each Lessee (it being understood that
subject to Section 32.1(i) each Lessee shall remain a direct or indirect
wholly- owned Subsidiary of the Guarantor); (ii) be, and ensure that each
Lessee is, duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary and the failure to so qualify would have a Material
Adverse Effect on the Guarantor or such Lessee, as applicable; and (iii) comply
with all Contractual Obligations and Requirements of Law binding upon it,
except to the extent that the failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect on the Guarantor or such Lessee, as
applicable.
31.2. Books, Records and Inspections. (i) Maintain complete and
accurate books and records with respect to the Vehicles leased by it under this
Agreement; (ii) at any time and from time to time during regular business
hours, and with reasonable prior notice from the Lessor or the Trustee, permit
the Lessor or the Trustee (or such other person who may be designated from time
to time by the Lessor or the Trustee), or its agents or representatives to
examine and make copies of all books, records and documents in the possession
or under the control of the Guarantor or such Lessee relating to the Vehicles
leased under this Agreement, including without limitation, in connection with
the Trustee's satisfaction of any requests of a Manufacturer performing an
audit under its Repurchase Program; and (iii) visit the office and properties
of the Guarantor or such Lessee for the purpose of examining such materials,
and to discuss matters relating to the Vehicles leased hereunder or the
Guarantor's or such Lessee's performance under this Agreement
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48
with any of the officers or employees of the Guarantor or such Lessee having
knowledge of such matters.
31.3. Insurance. In addition to its obligations set forth in Section
5 hereof, each Lessee shall maintain or cause to be maintained, with
financially sound and reputable insurers satisfactory to the Lessor, insurance
with respect to their respective properties and businesses against loss or
damage of the kinds customarily insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated, of
such types and in such amounts as are customarily carried under similar
circumstances by such other corporations, and the Guarantor and the Lessee
shall, from time to time upon the Lessor's or the Trustee's reasonable request,
deliver to the Lessor and Trustee, copies of certificates describing all
insurance then in effect. All self-insurance maintained by any member of the
Lessee Group shall be maintained in a financially prudent manner.
31.4. Repurchase Programs. With respect to each Vehicle leased by
each Lessee (a) unless previously purchased by such Lessee pursuant to this
Agreement, turn in such Vehicle to the relevant Manufacturer within the
Repurchase Period therefor, (b) dispose of such Vehicle under the applicable
Repurchase Program according to its historical practice and in accordance with
the requirements of such Repurchase Program, and (c) comply with all of its
(and the Lessor's) obligations under the applicable Repurchase Program.
31.5. Reporting Requirements. Furnish, or cause to be furnished to
the Lessor:
(i) Audit Report. As soon as available and in any event
within one hundred ten days after the end of each fiscal year of the
Guarantor, a copy of the consolidated balance sheet of the Guarantor
and its Subsidiaries as at the end of such fiscal year, together with
the related statements of earnings, stockholders' equity and cash
flows for such fiscal year, prepared in reasonable detail and in
accordance with GAAP certified by Deloitte & Touche (or such other
independent certified public accountants of recognized national
standing as shall be selected by the Guarantor);
(ii) Quarterly Statements. As soon as available, but in any
event within 45 days after the end of each fiscal quarter (except the
fourth fiscal quarter) of the Guarantor, copies of the unaudited
consolidated balance sheet of the Guarantor and its Subsidiaries as at
the end of such fiscal quarter and the related unaudited statements of
earnings, stockholders, equity and cash flows for the portion of the
fiscal year through such fiscal quarter (and as to the
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49
statements of earnings for such fiscal quarter) in each case setting
forth in comparative form the figures for the corresponding periods of
the previous fiscal year, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and certified by the chief financial or accounting
officer of the Guarantor as presenting fairly the financial condition
and results of operations of the Guarantor and its Subsidiaries
(subject to normal year-end adjustments);
(iii) Lease Events of Default; Wind-Down Events. As soon as
possible but in any event within two Business Days after the Guarantor
or any Lessee has knowledge of the occurrence of any Lease Event of
Default, Potential Lease Event of Default, Manufacturer Event of
Default, Potential Manufacturer Event of Default, Lessee Partial
Wind-Down Event or Potential Lessee Partial Wind-Down Event, a written
statement of an authorized Officer describing such event and the
action that the Guarantor or a Lessee, as the case may be, proposes to
take with respect thereto;
(iv) Monthly Vehicle Statements. On or before the third
Business Day prior to each Due Date, a monthly vehicle statement
(each, a "Monthly Vehicle Statement") in a form acceptable to the
Lessor, which shall specify (i) the vehicle identification numbers
(the "VIN") for the Vehicles leased hereunder during the Related Month
by such Lessee, (ii) the Capitalized Cost for such Vehicles, (iii) the
Net Book Value of such Vehicles as of the end of the Related Month,
(iv) those Vehicles that have been turned back to Manufacturers
pursuant to the applicable Repurchase Program during the Related Month
and the Repurchase Prices therefor, (v) those Vehicles that have
suffered a Casualty during the Related Month and their respective Net
Book Values, (vi) the aggregate Repurchase Prices scheduled to be
received by the Lessor during the Related Month from the
Manufacturers, (vii) the aggregate Depreciation Charges for all
Vehicles continuing in the possession of the Lessee, (viii) the total
amount of Monthly Base Rent and Monthly Variable Rent being paid on
such date, (ix) information with respect to such Lessee necessary for
the Servicer to compute the Aggregate Asset Amount as of the end of
the Related Month, (x) information with respect to such Lessee
necessary for the Servicer to compute the Monthly Supplemental Rent
for such Lessee with respect to the Related Month, and (xi) any other
charges owing from, and credits due to, the Lessee submitting such
Statement under this Agreement; and
(v) Other. Promptly, from time to time, such other
information, documents, or reports respecting the Vehicles leased
under this Agreement or the condition or operations,
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50
financial or otherwise, of the Guarantor or the Lessees as the Lessor
or the Trustee may from time to time reasonably request in order to
protect the interests of the Lessor or the Trustee under or as
contemplated by this Agreement or any other Related Document.
31.6. Taxes and Liabilities. Pay when due all taxes, assessments and
other material (determined on a consolidated basis) liabilities (including,
without limitation, taxes, titling fees and registration fees payable with
respect to Vehicles) except as contested in good faith and by appropriate
proceedings with respect to which adequate reserves have been established, and
are being maintained, in accordance with GAAP if and so long as forfeiture of
any part of the Vehicles leased under this Agreement will not result from the
failure to pay any such taxes, assessments or other material liabilities during
the period of any such contest.
31.7. Compliance with Laws. Comply with all Requirements of Law
related to its businesses if the failure so to comply would have a Material
Adverse Effect on the Guarantor or such Lessee, as applicable.
31.8. Maintenance of Separate Existence. The Guarantor and each
Lessee acknowledges its receipt of a copy of that certain opinion letter issued
by Dechert Price & ▇▇▇▇▇▇, dated August 25, 1994 and addressing the issue of
substantive consolidation as it may relate to the Guarantor, each Lessee and
the Lessor. The Guarantor and each Lessee hereby agrees to maintain in place
all policies and procedures, and take and continue to take all action,
described in the factual assumptions set forth in such opinion letter and
relating to such Person.
31.9. Trustee as Lienholder. Concurrently with each leasing of a
Vehicle under this Agreement, the Servicer shall indicate on its computer
records that the Trustee as assignee of the Lessor is the holder of a Lien on
such Vehicle pursuant to the terms of the Indenture.
32. CERTAIN NEGATIVE COVENANTS. Until the expiration or termination
of this Agreement and thereafter until the obligations of each Lessee and the
Guarantor are paid in full, the Guarantor and each Lessee agrees that, unless
at any time the Lessor and the Trustee shall otherwise expressly consent in
writing, it will not (and, in the case of the Guarantor, will not permit any
Lessee to):
32.1. Mergers, Consolidations. Be a party to any merger or
consolidation, other than: (i) a merger or consolidation of any Subsidiary of
the Guarantor into or with the Guarantor (provided, however, that the Guarantor
is the surviving corporation) or any
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51
merger or consolidation of any Subsidiary of the Guarantor with or into another
Subsidiary of the Guarantor, and (ii) a merger or consolidation of the
Guarantor into or with another entity if:
(a) the corporation formed by such consolidation or into or
with which the Guarantor is merged shall be a corporation organized
and existing under the laws of the United States of America or any
State or the District of Columbia, and, if the Guarantor is not the
surviving entity, shall expressly assume, by an agreement supplement
hereto executed and delivered to the Trustee, the performance of every
covenant and obligation of the Guarantor hereunder and under all other
Related Documents;
(b) the Guarantor has delivered to the Trustee an officer's
certificate and an opinion of counsel each stating that such
consolidation or merger and such supplemental agreement comply with
this Section 32.1 and that all conditions precedent herein provided
for relating to such transaction have been complied with; and
(c) the Rating Agency Condition shall be met with respect to
such assignment and succession.
32.2. Other Agreements. Enter into any agreement containing any
provision which would be violated or breached by the performance of its
obligations hereunder or under any instrument or document delivered or to be
delivered by it hereunder or in connection herewith.
32.3. Liens. Create or permit to exist any Lien with respect to any
Vehicle leased hereunder now or hereafter existing or acquired, except Liens in
favor of the Lessor or the Trustee or the Secured Parties and the following
Liens to the extent such liens in the aggregate would not materially adversely
affect the interests of the Lessor or the Trustee or the Secured Parties under
this Agreement or the Indenture or the likelihood of payment of Rent hereunder
or the Notes thereunder (herein collectively called the "Permitted Liens"): (i)
Liens for current taxes not delinquent or for taxes being contested in good
faith and by appropriate proceedings, and with respect to which adequate
reserves have been established, and are being maintained, in accordance with
GAAP, (ii) Liens, including judgment liens, arising in the ordinary course of
business being contested in good faith and by appropriate proceedings, and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (iii) Liens incurred in the ordinary
course of business in connection with worker's compensation, unemployment
insurance or other forms of governmental insurance or benefits, and (iv)
mechanics', materialmen's, landlords', warehousemen's and carriers' Liens,
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52
and other Liens imposed by law, securing obligations arising in the ordinary
course of business that are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves have been established,
and are being maintained, in accordance with GAAP.
32.4. Use of Vehicles. Knowingly use or allow the Vehicles to be
used in any manner that would (i) make such Vehicles ineligible for repurchase
under an Eligible Repurchase Program (subject to the provisions of Section 21
hereof regarding Eligibility Waiver Events) or (ii) subject the Vehicles to
confiscation.
33. BANKRUPTCY PETITION AGAINST LESSOR. The Guarantor and each
Lessee hereby covenants and agrees that, prior to the date which is one year
and one day after the payment in full of all Series of Notes, it will not
institute against, or join any other Person in instituting against, the Lessor
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States. In the event that the Guarantor or any Lessee
takes action in violation of this Section 33, the Lessor agrees, for the
benefit of the Noteholders, that it shall file an answer with the bankruptcy
court or otherwise properly contest the filing of such a petition by the
Guarantor or any such Lessee against the Lessor or the commencement of such
action and raise the defense that the Guarantor or any such Lessee has agreed
in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as its counsel advises that it may
assert. The provisions of this Section 33 shall survive the termination of
this Agreement.
34. SUBMISSION TO JURISDICTION. The Lessor and the Trustee may
enforce any claim arising out of this Agreement in any state or federal court
having subject matter jurisdiction, including, without limitation, any state or
federal court located in the State of New York. For the purpose of any action
or proceeding instituted with respect to any such claim, the Guarantor and each
Lessee hereby irrevocably submits to the jurisdiction of such courts. Each
Lessee hereby irrevocably designates the Guarantor to receive for and on behalf
of such Lessee service of process in New York. The Guarantor and each Lessee
further irrevocably consents to the service of process out of said courts by
mailing a copy thereof, by registered mail, postage prepaid, to the Guarantor
or such Lessee, as the case may be, and agrees that such service, to the
fullest extent permitted by law, (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and (ii)
shall be taken and held to be valid personal service upon and personal delivery
to it. Nothing herein contained shall affect the right of the
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53
Trustee and the Lessor to serve process in any other manner permitted by law or
preclude the Lessor or the Trustee from bringing an action or proceeding in
respect hereof in any other country, state or place having jurisdiction over
such action. The Guarantor and each Lessee hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may have or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in any such court located in the State of New York and any claim that any such
suit, action or proceeding brought in such a court has been brought in an
inconvenient forum.
35. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement. All obligations of the Guarantor and each Lessee and all
rights of the Lessor or the Trustee expressed herein shall be in addition to
and not in limitation of those provided by applicable law or in any other
written instrument or agreement.
36. JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT TO WHICH IT IS A PARTY, OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED
TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
37. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party, addressed to it, at its
address or telephone number set forth on the signature pages below, or at such
other address or telephone number as such party may hereafter specify for the
purpose by notice to the other party. In each case, a copy of all notices,
requests and other communications that are sent by any party hereunder shall be
sent to the Trustee and a copy of all notices, requests and other
communications that are sent by any Lessee or the Guarantor to the Guarantor or
any other Lessee that pertain to this Agreement shall be sent to the Lessor and
the Trustee. Copies of notices, requests and other communications delivered to
the Trustee and/or
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54
the Lessor pursuant to the foregoing sentence shall be sent to the following
addresses:
TRUSTEE: Bankers Trust Company
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust and Agency
Group/Structured Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
LESSOR: Team Fleet Financing Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Norwalk
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice, request or communication shall be effective when received at
the address specified below. Copies of all notices must be sent by first class
mail promptly after transmission by facsimile.
38. LIABILITY. Each member of the Lessee Group shall be held jointly
and severally liable for all of the obligations of each other member of the
Lessee Group hereunder.
39. TITLE TO REPURCHASE PROGRAMS IN LESSOR. Each Lessee, by its
execution hereof, acknowledges and agrees that (i) the Lessor is the sole owner
and holder of all right, title and interest in and to the Repurchase Programs
and (ii) such Lessee has no right, title or interest in any Repurchase Program.
To confirm the foregoing, each Lessee, by its execution hereof, hereby assigns
and transfers to the Lessor any rights that such Lessee may have in respect of
any Repurchase Programs.
40. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
41. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute one and the same Agreement.
42. EFFECTIVENESS. This Agreement shall become effective
concurrently with the issuance of the first Series of Notes.
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55
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
it to be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
LESSOR:
TEAM FLEET FINANCING CORPORATION
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief
Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Norwalk
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
LESSEES:
TRANEX RENTALS OF NEW YORK, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
CAPITAL CITY LEASING, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇-AL, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
WESTEAM ENTERPRISES, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
TEAM RENTAL OF PHILADELPHIA, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Address: Arrivals Road
Philadelphia Int'l
Airport
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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TEAM RENTAL OF PITTSBURGH, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Address: Car Rental ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ #▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
TEAM RENTAL OF CINCINNATI, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
GUARANTOR:
TEAM RENTAL GROUP, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive
Officer
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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58
SCHEDULE 1
Lessees on Date of Execution of Lease
TRANEX RENTALS OF NEW YORK, INC.
CAPITAL CITY LEASING, INC.
▇▇▇-AL, INC.
WESTEAM ENTERPRISES, INC.
TEAM RENTAL OF PHILADELPHIA, INC.
TEAM RENTAL OF PITTSBURGH, INC.
TEAM RENTAL OF CINCINNATI, INC.
59
SCHEDULE 2
Lessees Selling Lessee Acquired Vehicles
on Date of Execution of Lease
TRANEX RENTALS OF NEW YORK, INC.
CAPITAL CITY LEASING, INC.
▇▇▇-AL, INC.
WESTEAM ENTERPRISES, INC.
60
SCHEDULE 30.8
Business Locations
STATES
STATE OF IN
PRINCIPAL WHICH
PLACE OF CONDUCTS
BUSINESS LOCATION BUSINESS BUSINESS
----------------- -------- --------
TEAM RENTAL GROUP, INC. ▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
1028 ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Blvd.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
TRANEX RENTALS OF NEW YORK, INC. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Trade Names:
Budget Rent a Car of Albany
Budget Rent a Car of Rochester
CAPITAL CITY LEASING, INC. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Trade Names:
Budget Rent a Car of ▇▇▇▇▇▇▇▇
▇▇▇-AL, INC. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Trade Names:
Budget Rent a Car
Budget of San Diego
Budget Rent a Car of San Diego
WESTEAM ENTERPRISES, INC. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
61
STATES
STATE OF IN
PRINCIPAL WHICH
PLACE OF CONDUCTS
BUSINESS LOCATION BUSINESS BUSINESS
----------------- -------- --------
Trade Names;
Budget Car and Truck Rental
of San Diego County
Budget of San Diego County
Budget Car and Truck Rental
TEAM RENTAL OF PHILADELPHIA, INC. Arrivals Road Pennsylvania Pennsylvania
Pennsylvania International Airport
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Trade Names:
Budget Rent a Car of Pennsylvania
TEAM RENTAL OF PITTSBURGH, INC. Car Rental Access Road Pennsylvania Pennsylvania
▇▇▇ #▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Trade Names:
Budget Rent a Car of Pittsburgh
TEAM RENTAL OF CINCINNATI, INC. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Ohio
Trade Names:
Budget Rent a Car of Cincinnati
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62
ATTACHMENT A
Vehicle Acquisition Schedule
1 Vehicle Group Number (Vehicle Model)
2 Vehicle Identification Number (VIN)
3 Vehicle Lease Commencement Date
4 Capitalized Cost
5 Monthly Base Rent
6 Garaging State
A-1
63
ATTACHMENT B
FORM OF POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Team Fleet Financing
Corporation does hereby make, constitute and appoint ______________________
___________-____________________________ its true and lawful
Attorney(s)-in-fact for it and in its name, stead and behalf, to execute any
and all documents pertaining to the titling of motor vehicles in the name of
Team Fleet Financing Corporation, the noting of the lien of Bankers Trust
Company, as trustee, as the first lienholder on certificates of title, the
licensing and registration of motor vehicles and the transfer of title to the
Manufacturer and to ______________. This power is limited to the foregoing and
specifically does not authorize the creation of any liens or encumbrances on
any of said motor vehicles.
The powers and authority granted hereunder shall, unless
sooner terminated, revoked or extended, cease five years from the date of
execution as set forth below.
IN WITNESS WHEREOF, Team Fleet Financing Corporation has
caused this instrument to be executed on its behalf by its Vice President and
Treasurer this ______ day of _________, 19__.
Team Fleet Financing Corporation
By: ___________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive
Officer
State of _____________ )
)
County of ____________ )
Subscribed and sworn before me, a notary public, in and for
said county and state, this _________ day of _________, 19__.
__________________________________
Notary Public
My Commission Expires:_____________
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ATTACHMENT C
FORM OF JOINDER IN LEASE
THIS JOINDER IN LEASE AGREEMENT (this "Joinder") is executed
as of ________________ __, 19__, by ________________, a ______________________
("Joining Party"), and delivered to Team Fleet Financing Corporation, a
Delaware corporation ("TFFC"), as lessor pursuant to the Master Motor Vehicle
Lease and Servicing Agreement, dated as of July 1, 1994 (as amended,
supplemented or otherwise modified from time to time, the "Lease"), among
TFFC, those direct or indirect subsidiaries of Team Rental Group, Inc., a
Delaware corporation ("Team") that are listed on Schedule 1 to the Agreement
and those that become party to the Agreement pursuant to the provisions of
Section 24 thereof (individually, a "Lessee" and, collectively, the "Lessees"),
and Team, as guarantor. Capitalized terms used herein but not defined herein
shall have the meanings provided for in the Agreement.
R E C I T A L S:
WHEREAS, the Joining Party is a direct or indirect Subsidiary
of Team; and
WHEREAS, the Joining Party desires to become a "Lessee" under
and pursuant to the Agreement.
NOW, THEREFORE, the Joining Party agrees as follows:
A G R E E M E N T:
1. The Joining Party hereby represents and warrants to and in
favor of TFFC and the Trustee that (i) the Joining Party is a direct or
indirect Subsidiary of Team, (ii) all of the conditions required to be
satisfied pursuant to Section 24 of the Agreement in respect of the Joining
Party becoming a Lessee thereunder have been satisfied, and (iii) all of the
representations and warranties contained in Section 30 of the Agreement with
respect to the Lessees are true and correct as applied to the Joining Party as
of the date hereof.
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65
2. The Joining Party hereby agrees to assume all of the
obligations of a "Lessee" under the Agreement and agrees to be bound by all of
the terms, covenants and conditions therein.
3. By its execution and delivery of this Joinder, the
Joining Party hereby becomes a Lessee for all purposes under the Agreement. By
its execution and delivery of this Joinder, TFFC acknowledges that the Joining
Party is a Lessee for all purposes under the Agreement.
IN WITNESS WHEREOF, the Joining Party has caused this Joinder
to be duly executed as of the day and year first above written.
[Name of Joining Party]
By: ________________________
Name:
Title:
Accepted and Acknowledged by:
TEAM FLEET FINANCING CORPORATION
By: ___________________________
Name:
Title:
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇
FORM OF ▇▇▇▇ OF SALE
IN CONSIDERATION OF the payment of $ ________________, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, [SELLER], a [state of incorporation] corporation (the
"Seller"), does hereby sell, assign, transfer, convey, grant, bargain, set
over, release, deliver and confirm unto Team Fleet Financing Corporation, a
Delaware corporation (the "Buyer"), its successors and assigns, forever, the
entire right, title and interest of the Seller in, to and under all the
vehicles listed and described in Schedule 1 attached hereto (the "Vehicles"),
the Seller's interest in Repurchase Programs with respect to the Vehicles, all
moneys due or to become due and all amounts received or receivable with respect
thereto and all proceeds thereof (collectively, the "Transferred Assets").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Base Indenture, dated as of July 1, 1994
among the Buyer, as issuer, Team Rental Group, Inc. ("Team"), as servicer and
as Team Interestholder and Bankers Trust Company, as trustee.
The Seller hereby constitutes and appoints the Buyer, its
successors and assigns, the true and lawful attorney of the Seller, with full
power of substitution, in the name of the Buyer or in the name of the Seller,
but for the benefit and at the expense of the Buyer, to collect, demand and
receive any and all Transferred Assets, to collect any accounts receivable
included in the Transferred Assets and to endorse in the name of the Seller any
checks or drafts received in payment thereof and to enforce by appropriate
proceedings any claim, right or title of any kind in or to the Transferred
Assets. The foregoing shall include, without limitation, the right to change
the holder of title on the certificates of title included within the
Transferred Assets. The Seller acknowledges that the foregoing powers are
coupled with an interest and shall be irrevocable by the Seller for any reason.
From and after the date hereof, upon request of the Buyer, the
Seller, at its own expense, shall do such further and other acts and execute
such further and other agreements, assignments, bills of sale, certificates
(including Certificates of Title), powers, instruments and other documents as
the Buyer may deem necessary, desirable or appropriate to vest in the Buyer or
further assure to the Buyer all right, title and interest of the Seller in, to
and under the Transferred Assets.
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67
IN WITNESS WHEREOF, the Seller has executed this ▇▇▇▇ of Sale
as of ________________, 1994.
[SELLER]
By: ________________________
Name:
Title:
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68
SCHEDULE 1
TO ▇▇▇▇ OF SALE
VEHICLES
VIN NUMBER NET BOOK VALUE
___________ ________________
Total: $
================
D-3