1
TEAM FLEET FINANCING CORPORATION,
AS LESSOR
BUDGET GROUP, INC.,
AS GUARANTOR
BUDGET RENT A CAR SYSTEMS, INC.
and those Subsidiaries, Affiliates and Non-Affiliates
of Budget Group, Inc.
named on Schedule 1 hereto,
AS LESSEES
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP III
Dated as of June 29, 2000
AS SET FORTH IN SECTION 25 HEREOF, THE LESSOR HAS ASSIGNED TO THE TRUSTEE (AS
DEFINED HEREIN) CERTAIN OF ITS RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE.
TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION) NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE
TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED
COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE
RECEIPT THEREFOR EXECUTED BY THE TRUSTEE ON THE SIGNATURE PAGE THEREOF.
2
TABLE OF CONTENTS
PAGE
1. DEFINITIONS..................................................................................................... 3
2. GENERAL AGREEMENT............................................................................................... 3
1.1 Leasing of Group III Vehicles........................................................................... 5
1.2 Right of Lessees to Act as Lessor's Agent............................................................... 7
1.3 Payment of Capitalized Cost by Lessor................................................................... 7
1.4 Non-liability of Lessor................................................................................. 8
1.5 Conditions Precedent.................................................................................... 8
3. TERM............................................................................................................ 13
1.1 Vehicle Term: Group III Repurchase Vehicles............................................................. 13
1.2 Vehicle Term: Group III Non-Repurchase Vehicles......................................................... 14
1.3 The "Lease Commencement Date"........................................................................... 14
2. RENT AND CHARGES................................................................................................ 15
2.1 Payment of Rent......................................................................................... 15
2.2 Payment of Monthly Supplemental Payments................................................................ 15
2.3 Payment of Supplemental Rent............................................................................ 15
2.4 Payment of Termination Payments, Casualty Payments, and Late Return Payments............................ 15
2.5 Late Payment............................................................................................ 15
2.6 Prepayments............................................................................................. 15
3. INSURANCE....................................................................................................... 15
3.1 Personal Injury and Damage.............................................................................. 16
3.2 Delivery of Certificate of Insurance.................................................................... 16
3.3 Changes in Insurance Coverage........................................................................... 16
4. CASUALTY OBLIGATION............................................................................................. 17
4.1 Casualty................................................................................................ 17
5. VEHICLE USE..................................................................................................... 17
6. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES................................................... 18
7. MAINTENANCE AND REPAIRS......................................................................................... 18
8. VEHICLE WARRANTIES.............................................................................................. 19
9. VEHICLE RETURN GUIDELINES....................................................................................... 19
9.1 Vehicle Turn-in-Condition............................................................................... 19
-i-
3
9.2 Return.................................................................................................. 19
9.3 Termination Payments.................................................................................... 20
9.4 Repurchase Price Interest............................................................................... 20
10. DISPOSITION PROCEDURE.......................................................................................... 20
11. ODOMETER DISCLOSURE REQUIREMENT................................................................................ 20
13. GENERAL INDEMNITY.............................................................................................. 22
13.1 Indemnity by the Lessees............................................................................... 22
13.2 Reimbursement Obligation by the Lessee Group........................................................... 23
13.3 Defense of Claims...................................................................................... 23
14. ASSIGNMENT..................................................................................................... 24
14.1 Right of the Lessor to Assign this Agreement........................................................... 24
14.2 Limitations on the Right of the Lessee to Assign this Agreement........................................ 24
15. DEFAULT AND REMEDIES THEREFOR.................................................................................. 24
15.1 Lease Events of Default................................................................................ 24
15.2 Effect of Lease Event of Default....................................................................... 26
15.3 Rights of Lessor Upon Lease Event of Default, Liquidation Event of Default or Limited
Liquidation Event of Default................................................................................. 26
15.4 Rights of Trustee Upon Liquidation Event of Default, Limited Liquidation Event of Default and
Non-Performance of Certain Covenants......................................................................... 27
15.5 Measure of Damages..................................................................................... 28
15.6 Application of Proceeds................................................................................ 29
16. MANUFACTURER EVENTS OF DEFAULT................................................................................. 30
17. LESSEE PARTIAL WIND-DOWN EVENTS................................................................................ 30
18. ELIGIBILITY WAIVER EVENTS...................................................................................... 31
19. CERTIFICATION OF TRADE OR BUSINESS USE......................................................................... 31
20. SURVIVAL....................................................................................................... 31
21. ADDITIONAL LESSEES............................................................................................. 32
22. GUARANTY....................................................................................................... 33
22.1 Guaranty............................................................................................... 33
22.2 Scope of Guarantor's Liability......................................................................... 33
22.3 Lessor's Right to Amend this Agreement, Etc............................................................ 34
22.4 Waiver of Certain Rights by Guarantor.................................................................. 34
-ii-
4
22.5 Lessees' Obligations to Guarantor and Guarantor's Obligations to Lessees Subordinated.................. 35
22.6 Guarantor to Pay Lessor's Expenses..................................................................... 36
22.7 Reinstatement.......................................................................................... 37
22.8 Pari Passu Indebtedness................................................................................ 37
23. RIGHTS OF LESSOR ASSIGNED TO TRUSTEE........................................................................... 37
24. RIGHT OF LESSEE TO DELEGATE RIGHTS AND OBLIGATIONS HEREUNDER TO GUARANTOR...................................... 38
25. MODIFICATION AND SEVERABILITY.................................................................................. 38
26. CERTAIN REPRESENTATIONS AND WARRANTIES......................................................................... 39
26.1 Due Organization, Authorization, etc................................................................... 39
26.2 Financial Information; Financial Condition............................................................. 39
26.3 Litigation............................................................................................. 40
26.4 Liens.................................................................................................. 40
26.5 Employee Benefit Plans................................................................................. 40
26.6 Investment Company Act................................................................................. 41
26.7 Regulations G, T, U and X.............................................................................. 41
26.8 Business Locations; Trade Names; Principal Places of Business Locations................................ 41
26.9 Taxes.................................................................................................. 41
26.10 Governmental Authorization............................................................................. 41
26.11 Compliance with Laws................................................................................... 42
26.12 Eligible Vehicles...................................................................................... 42
26.13 Supplemental Documents True and Correct................................................................ 42
26.14 Accuracy of Information................................................................................ 42
27. CERTAIN AFFIRMATIVE COVENANTS.................................................................................. 42
27.1 Corporate Existence; Foreign Qualification............................................................. 43
27.2 Books, Records and Inspections......................................................................... 43
27.3 Insurance.............................................................................................. 43
27.4 Repurchase Programs.................................................................................... 43
27.5 Reporting Requirements................................................................................. 44
27.6 Taxes and Liabilities.................................................................................. 46
27.7 Compliance with Laws................................................................................... 47
27.8 Maintenance of Separate Existence...................................................................... 47
27.9 Trustee as Lienholder.................................................................................. 47
27.10 Maintenance of Credit Enhancement...................................................................... 47
28. CERTAIN NEGATIVE COVENANTS..................................................................................... 47
28.1 Mergers, Consolidations................................................................................ 47
28.2 Other Agreements....................................................................................... 48
-iii-
5
28.3 Liens.................................................................................................. 48
28.4 Use of Vehicles........................................................................................ 48
28.5 Restrictions on Distributions.......................................................................... 48
29. BANKRUPTCY PETITION AGAINST LESSOR............................................................................. 49
30. SUBMISSION TO JURISDICTION..................................................................................... 49
31. GOVERNING LAW.................................................................................................. 49
32. JURY TRIAL..................................................................................................... 50
33. NOTICES........................................................................................................ 50
34. LIABILITY...................................................................................................... 51
35. TITLE TO REPURCHASE PROGRAMS IN LESSOR......................................................................... 51
36. HEADINGS....................................................................................................... 51
37. EXECUTION IN COUNTERPARTS...................................................................................... 51
38. EFFECTIVENESS.................................................................................................. 51
-iv-
6
ANNEX A OPERATING LEASE TERMS
ANNEX B FINANCING LEASE TERMS
SCHEDULE 1 LESSEES ON DATE OF EXECUTION OF LEASE
SCHEDULE 27.8 BUSINESS LOCATIONS
ATTACHMENT A-1 SCHEDULE OF INITIAL FLEET
ATTACHMENT A-2 GROUP III VEHICLE ACQUISITION SCHEDULE
ATTACHMENT B FORM OF POWER OF ATTORNEY
ATTACHMENT C FORM OF JOINDER IN LEASE
ATTACHMENT D FORM OF ▇▇▇▇ OF SALE
-v-
7
MASTER MOTOR VEHICLE LEASE AGREEMENT - GROUP III
This Master Motor Vehicle Lease Agreement - Group III (this
"Agreement"), dated as of June 29, 2000 by and among TEAM FLEET FINANCING
CORPORATION, a Delaware corporation ("Lessor"), BUDGET RENT A CAR SYSTEMS, INC.
("Budget Systems"), a Delaware corporation, and those direct or indirect
Subsidiaries (the "Budget Subsidiaries") of Budget Group, Inc. ("Budget"), a
Delaware corporation formerly known as Team Rental Group, Inc. ("Team"), those
Affiliates (other than the Budget Subsidiaries) and non-Affiliates, (such
Affiliates and non-Affiliates the "Non-Budget Lessees") of Budget that are
listed on Schedule 1 hereto and those that become party to this Agreement
pursuant to the provisions of Section 23 hereof (individually, each Budget
Subsidiary and each Non-Budget Lessee, a "Lessee" and, collectively, the
"Lessees"), and BUDGET GROUP, INC., as guarantor (Budget in such capacity, 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 (such capitalized term, together with all other
capitalized terms used herein, shall have the meaning assigned thereto in
Section 1) intends to purchase, finance the purchase of and refinance
additional Financed Vehicles that are Eligible Repurchase Vehicles and Eligible
Non-Repurchase Vehicles from one or more Manufacturers with (i) the proceeds
obtained by the issuance from time to time of Group III Series of Notes and
(ii) certain other funds;
WHEREAS, the Lessor has purchased or will purchase Lessor-Owned
Vehicles, and will finance the acquisition of Financed Vehicles, that are Group
III Repurchase Vehicles and Group III Non-Repurchase Vehicles from
Manufacturers through dealers authorized by such Manufacturers, at auctions
conducted by automobile dealers not affiliated with Budget, from Affiliates of
Budget or through other vehicle sales;
WHEREAS, the Lessor desires to lease to the Lessees, and the Lessees
desire to lease from the Lessor, Group III Repurchase Vehicles and Group III
Non-Repurchase Vehicles so acquired, financed or refinanced by the Lessor for
use in the daily vehicle rental businesses of the Lessees; and
WHEREAS, the Guarantor has, pursuant to Section 24 hereof, guaranteed
the obligations of the Lessees under this Agreement.
8
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 (including the
preamble and the recitals hereto) shall have the meanings ascribed to such
terms in (a) the Definitions List (the "Definitions List") attached as Schedule
1 to the Amended and Restated Base Indenture, dated as of December 1, 1996,
among the Lessor, Team (now known as Budget) and Bankers Trust Company, a New
York banking corporation, as trustee, as such Definitions List may be amended
or modified from time to time in accordance with the provisions of the
Indenture, and (b) each Supplement to the Base Indenture relating to a Series
of Notes identified in such Supplement as being a Group III Series of Notes.
Unless the context otherwise requires, terms defined in both the Base Indenture
and one or more of such Series Supplements shall have the meanings assigned to
such terms in the applicable Series Supplements.
2. GENERAL AGREEMENT. (a) As specified in attachments hereto, the
Lessees and the Lessor intend that this Agreement be (i) an operating lease
with respect to the Lessor-Owned Vehicles and (ii) a financing arrangement with
respect to the Financed Vehicles.
(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" with respect to the
Lessor-Owned Vehicles, then it is the intention of the parties that this
Agreement, as it applies to the Lessor-Owned Vehicles, shall constitute a
security agreement under applicable law. It is the intention of the parties
that this Agreement, as it applies to the Financed Vehicles, shall in all
events constitute a security agreement under applicable law. In furtherance
thereof, as collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all of the obligations and liabilities of each Lessee to the Lessor
hereunder, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred (including interest accruing after
the Lease Expiration Date and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding), which may arise under, out of, or in connection with, this
Agreement and any other document made, delivered or given in connection
herewith, whether on account of rent, principal, interest, reimbursement
obligations, fees, indemnities, costs or expenses (including all fees and
disbursements of counsel to the Lessor or the Trustee that are required to be
paid by such Lessee pursuant to the terms hereof), 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 (the
"Lease Collateral"):
(i) the rights of such Lessee under this Agreement, as
the 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
-3-
9
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, together with all financing statements filed in favor of,
or assigned to, such Lessee describing any collateral securing such
obligations or liabilities and (d) all guarantees, insurance 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) all Lessor-Owned Vehicles leased by such Lessee from
the Lessor pursuant to this Agreement which, notwithstanding that this
Agreement is intended to convey only a leasehold interest in such
Lessor-Owned Vehicles, are determined to be owned by such Lessee, and
all Certificates of Title with respect to such Lessor-Owned Vehicles;
(iii) all Financed Vehicles leased by such Lessee from the
Lessor pursuant to this Agreement, and all Certificates of Title with
respect to such Group III Vehicles;
(iv) 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 (A) Lessor-Owned Vehicles leased under this
Agreement which, notwithstanding that this Agreement is intended to
convey only a leasehold interest in such Lessor-Owned Vehicles, are
determined to be owned by such Lessee, and (B) Financed Vehicles
leased under this Agreement, in each case, whether payable as
Repurchase Prices or Guaranteed Payments;
(v) the Collection Account, the Group III Collection
Account and each other collection account established pursuant to a
Series Supplement with respect to a Group III Series of Notes; (a) all
funds on deposit therein allocable to Group III Vehicles from time to
time; (b) all certificates and instruments, if any, representing or
evidencing any or all of such accounts or the funds on deposit therein
allocable to Group III Vehicles from time to time; and (c) all
investments made at any time and from time to time with the moneys
allocable to Group III Vehicles in such accounts (including income
thereon, including, without limitation, any and all such accounts,
certificates, instruments and investments constituting "investment
property" as defined in the UCC as in effect from time to time in the
State of New York);
-4-
10
(vi) all additional property that may from time to time
hereafter be subjected to the grant and pledge under this Agreement,
as the same may be modified or supplemented from time to time, by such
Lessee or by anyone on its behalf; and
(vii) 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, but not including
(for the avoidance of doubt) payments under consumer rental
agreements.
2.1 Leasing of Group III Vehicles Vehicles. (a) From time to time,
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 Group III Repurchase Vehicles and Group III Non-Repurchase Vehicles
constituting the Refinanced Vehicles and each additional Lessor-Owned Vehicle
and Financed Vehicle identified in certain vehicle orders (each, a "Group III
Vehicle Order") produced from time to time by a Lessee, listing Eligible
Repurchase Vehicles and Eligible Non-Repurchase Vehicles ordered by such Lessee
from Eligible Manufacturers or dealers, for itself or as agent for the Lessor,
pursuant to the terms of any applicable Repurchase Program or otherwise.
Subject to the conditions precedent set forth in Section 2.5 hereof and to
compliance with the terms of the related Series Supplements, the Lessor shall
make available to the applicable Lessee (i) financing for the Financed Vehicles
(other than Texas Vehicles and Hawaii Vehicles) and (ii) Lessor-Owned Vehicles,
Texas Vehicles and Hawaii Vehicles for lease to the Lessees hereunder in an
aggregate amount (each such financing or Lessor-Owned Vehicle made available, a
"Master Lease Advance").
(b) With respect to (i) any lease of Group III Vehicles in the
Initial Fleet, (ii) the refinancing of any other Eligible Vehicle owned by the
Lessor or any Lessee (collectively, together with any Group III Vehicles in the
Initial Fleet to be leased under this Agreement (including, without limitation,
any Group III Vehicles previously subject to any other Leases and refinanced
pursuant to this Agreement), the "Refinanced Vehicles"), and/or (iii) the
refinancing of Eligible Receivables, each applicable Lessee shall make
available to the Lessor a schedule as set forth in Attachment A-1 hereto
containing information concerning the Refinanced Vehicles and the Eligible
Receivables, of a scope agreed upon by the Lessor (a "Refinancing Schedule").
(c) With respect to any lease of Group III Vehicles not described
in (b) above, each applicable Lessee shall make available to the Lessor a
schedule containing the information with respect to such Group III Vehicles as
is set forth in Attachment A-2 hereto (each, a "Group III Vehicle Acquisition
Schedule"), or in such form as is otherwise requested by the Lessor. In
addition, each Lessee leasing Vehicles pursuant to such Group III Vehicle Order
agrees to provide such other information regarding such Vehicles as the Lessor
may require from time to time.
(d) The Lessees and the Lessor acknowledge that concurrently with
the execution and delivery of this Agreement, the Lessees specified on Schedule
1 hereto have made available to the
-5-
11
Lessor Group III Vehicle Orders to lease Vehicles currently owned by the Lessor
pursuant to this Agreement, together with the required Group III Vehicle
Acquisition Schedules or Refinancing Schedule, as the case may be, in respect
of such Group III Vehicle Orders.
(e) 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 one Business Day's written notice to
the Lessor and the Trustee, any Lessee may request that the Lessor purchase or
finance the Lessee's purchase of, an Eligible Non-Repurchase Vehicle from a
licensed independent automobile through an auction or other vehicle sale (the
"Auction Acquired Vehicles") for a purchase price equal to the Capitalized Cost
of such Auction Acquired Vehicle, in which event such Lessee shall, immediately
upon the consummation of such sale, lease such Auction Acquired Vehicle from
the Lessor pursuant to this Agreement (each such transaction is referred to as
an "Auction Sale Transaction"). In connection with each Auction Sale
Transaction, to evidence the conveyance of the Auction Acquired Vehicles from
the applicable dealer to the Lessor (in the case of Lessor-Owned Vehicles) or
the applicable Lessee (in the case of Financed Vehicles), the applicable Lessee
shall make available to (or, upon request by the Lessor, deliver to) the Lessor
the following:
(i) a Group III Vehicle Order (including a Group III
Vehicle Acquisition Schedule) with respect to all Auction Acquired Vehicles
covered by such Auction Sale Transaction;
(ii) the original Certificate of Title for each Auction
Acquired Vehicle together with a completed application to retitle such
Auction Acquired Vehicle in the name of the Lessor (in the case of
Lessor-Owned Vehicles, Hawaii Vehicles and Texas Vehicles) or such
Lessee (in the case of Financed Vehicles other than Hawaii Vehicles
and Texas Vehicles) and to have noted thereon the Trustee's security
interest in such Auction Acquired Vehicle pursuant to the Indenture;
and
(iii) a ▇▇▇▇ of sale, substantially in the form attached
hereto as Attachment D (each, an "Auction ▇▇▇▇ of Sale"), conveying
title to the Auction Acquired Vehicles, and copies of any certificate
given by the related auction house regarding the absence of liens
and/or the ownership of each such Group III Vehicle.
Notwithstanding the foregoing provisions of this Section 2.1(e), the Lessor
shall not acquire any Auction Acquired Vehicle for which it does not have a new
Certificate of Title if, after giving effect to such acquisition, the aggregate
Net Book Value of all such Auction Acquired Vehicles without a new Certificate
of Title would exceed 5% of the Aggregate Asset Amount. Other than Auction Sale
Transactions complying with the provisions of this Section 2.1, the Lessor
shall not purchase any Group III Non-Repurchase Vehicles from any independent
dealer at an auction. After any purchase or financing of Group III Vehicles by
the Lessor at auction, such Group III Vehicles will be subject to all the terms
and conditions of this Agreement.
-6-
12
(f) The Lessor shall lease to the Lessees, and the Lessees shall
lease from the Lessor, only Group III Vehicles that are Eligible Repurchase
Vehicles and Eligible Non-Repurchase Vehicles. This Agreement, together with
any other related documents attached to this Agreement or submitted with a
Group III Vehicle Order or Refinancing Schedule, including without limitation
any documents in connection with an Eligible Repurchase Program (collectively,
the "Supplemental Documents"), will constitute the entire agreement regarding
the leasing of Vehicles by the Lessor to the Lessees hereunder.
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
Group III 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 Group III 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 Group III Vehicles to a location selected by the relevant Lessee at such
Lessee's expense. Each Lessee agrees to accept Group III Non-Repurchase
Vehicles as produced and delivered, subject to the right of such Lessee to
reject any such Group III Non-Repurchase Vehicles damaged in transit or not
conforming to the related Group III Vehicle Order. Each Lessee agrees to accept
Group III Repurchase Vehicles as produced and delivered except each Lessee will
have the option to reject any Group III Repurchase 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 Group III Repurchase
Vehicle to the Manufacturer pursuant to the preceding sentence. Any member of
the Lessee Group that places a Group III Vehicle Order for a Group III
Repurchase Vehicle pursuant to this Agreement agrees that all Group III
Repurchase Vehicles ordered as provided herein shall be ordered utilizing the
procedures consistent with the applicable Eligible Repurchase Program.
2.3 Payment of Capitalized Cost by Lessor. (a) Upon invoicing of
any Group III Vehicle by the Manufacturer or other seller thereof, the Lessor
shall make a Master Lease Advance hereunder to pay to the Manufacturer, dealer
or other seller of such Group III Vehicle (or to reimburse the applicable
Lessee for) the costs and expenses incurred by the Lessor or such Lessee, as
applicable, in connection with the acquisition of such Group III Vehicle as
established by the invoice delivered in connection with such Group III Vehicle
(the "Capitalized Cost"). The relevant Lessee shall be responsible for all
damage in transit and shall pay all applicable costs and expenses of freight,
packing, handling, storage, shipment and delivery of such Group III Vehicle to
the extent that the same have not been included within the Capitalized Cost;
provided that solely in the case of the Initial Fleet, any other Refinanced
Vehicle, and any Eligible Receivable, the Lessor shall make Master Lease
Advances to pay to the applicable owner thereof (x) the aggregate Net Book
Value or Non-Repurchase Vehicle Value (as applicable) as of the Vehicle Lease
Commencement Date of the Initial Fleet and/or the Refinanced Vehicles, as
applicable, and (y) the face amount of the Eligible Receivables being
refinanced on the Vehicle Lease Commencement Date.
-7-
13
(b) Each Master Lease Advance made by the Lessor (i) with respect
to a Repurchase Vehicle shall be in an amount not exceeding the Net Book Value
of such Repurchase Vehicle and (ii) with respect to a Non-Repurchase Vehicle
shall be in an amount not exceeding the Non-Repurchase Vehicle Value of such
Non-Repurchase Vehicle. The aggregate amount of Master Lease Advances
outstanding at any time shall not exceed the Maximum Lease Commitment.
2.4 Non-liability of Lessor. The Lessor shall not be liable to any
of the Lessees for any failure or delay in obtaining Group III Vehicles or
making delivery thereof. AS BETWEEN THE LESSOR AND EACH LESSEE, ACCEPTANCE FOR
LEASE OF THE GROUP III VEHICLES SHALL CONSTITUTE SUCH LESSEE'S ACKNOWLEDGMENT
AND AGREEMENT THAT SUCH LESSEE HAS FULLY INSPECTED SUCH GROUP III VEHICLES,
THAT THE GROUP III 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, AN AGENT OF A MANUFACTURER, OR OTHERWISE ENGAGED
IN THE SALE OR DISTRIBUTION OF GROUP III VEHICLES, AND HAS NOT MADE AND DOES
NOT HEREBY MAKE ANY REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED,
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 WARRANTY THAT THE LEASED VEHICLES WILL SATISFY THE
REQUIREMENTS OF ANY LAW OR ANY CONTRACT SPECIFICATION, OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO AND AS BETWEEN THE LESSOR AND SUCH LESSEE, SUCH
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, SUCH LESSEE LEASES THE VEHICLES "AS IS." 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, WHATSOEVER OR HOWSOEVER CAUSED, WHETHER RESULTING FROM ANY
DEFECT IN OR ANY THEFT, DAMAGE, LOSS OR FAILURE OF ANY VEHICLE, OR OTHERWISE
AND THERE SHALL BE NO ABATEMENT OF RENT BECAUSE OF THE SAME.
2.5 Conditions Precedent. The agreement of the Lessor to make
available any Master Lease Advance for the acquisition of any Lessor-Owned
Vehicle for lease to a Lessee and to
-8-
14
make available any Master Lease Advance for the acquisition of any Texas
Vehicles and Hawaii Vehicles or the refinancing of any Refinanced Vehicle for
lease to a Lessee, is subject to the terms and conditions of the Indenture and
to the following conditions precedent as of the Vehicle Lease Commencement Date
for such Vehicle:
(a) Limitations on the Acquisition of Certain Vehicles.
Unless waived by the Required Noteholders as specified in the related
Series Supplements:
(i) the quotient (expressed as a percentage)
obtained by dividing (x) the aggregate Net Book Value of all
Group III Non-Repurchase Vehicles leased under this Agreement
as of such date (after giving effect to the inclusion of such
Vehicle under this Agreement) by (y) the greater of (A) the
Group III Aggregate Asset Amount as of such date (after
giving effect to the inclusion of such Vehicle under this
Agreement) and (B) the sum of the Group III Invested Amount
as of such date plus the available subordinated amounts for
all Group III Series of Notes as of such date, shall not
exceed the Maximum Non-Repurchase Percentage (if any) for any
Group III Series of Notes;
(ii) the quotient (expressed as a percentage)
obtained by dividing (x) the aggregate Net Book Value of all
Group III Repurchase Vehicles, manufactured by any
Manufacturer and leased under this Agreement as of such date
after giving effect to the inclusion of such Vehicle under
this Agreement) by (y) the greater of (A) the Group III
Aggregate Asset Amount as of such date (after giving effect
to the inclusion of such Vehicle under this Agreement) and
(B) the sum of the Group III Invested Amount as of such date
plus the available subordinated amounts for all Group III
Series of Notes as of such date, shall not exceed the Maximum
Manufacturer Percentage (if any) for any Group III Series of
Notes;
(iii) the quotient (expressed as a percentage)
obtained by dividing (x) the aggregate Net Book Value of all
Group III Repurchase Vehicles manufactured by either of Isuzu
and Subaru and leased under this Agreement as of such date
after giving effect to the inclusion of such Vehicle under
this Agreement) by (y) the greater of (A) the Aggregate Asset
Amount as of such date (after giving effect to the inclusion
of such Vehicle under this Agreement) and (B) the sum of the
Group III Invested Amount as of such date plus the available
subordinated amounts for all Group III Series of Notes as of
such date, shall not exceed the Maximum Isuzu/Subaru
Percentage for any Group III Series of Notes;
(iv) the quotient (expressed as a percentage)
obtained by dividing (x) the aggregate Net Book Value of all
Group III Repurchase Vehicles manufactured by either of Mazda
and Nissan and leased under this Agreement as of such date
(after giving effect to the inclusion of such Vehicle under
this Agreement) by (y) the greater of (A) the Aggregate Asset
Amount as of such date (after giving effect to the inclusion
of such Vehicle under this Agreement) and (B) the sum of the
Group
-9-
15
III Invested Amount as of such date plus the available
subordinated amounts for all Group III Series of Notes as of
such date, shall not exceed the Maximum Mazda/Nissan
Percentage for any Group III Series of Notes;
(v) if the Maximum Non-Repurchase Percentage,
the Maximum Manufacturer Percentage, Maximum Isuzu/Subaru
Percentage, or the Maximum Mazda/Nissan Percentage for any
Group III Series of Notes has (as calculated in clause (i),
(ii), (iii) or (iv) above, as applicable) been exceeded on or
prior to such date prior to giving effect to the inclusion of
such Vehicle (the amount of such excess, the "Excess"), such
Excess shall not increase after giving effect to the
inclusion of such Vehicle;
(vi) after giving effect to the inclusion of such
Vehicle under this Agreement, (A) the Credit Support Amount
for any Group III Series of Notes shall not be less than the
Minimum Credit Support Amount for such related Series and (B)
the Letter of Credit Amount for any Group III Series of Notes
shall not be less than the Required Letter of Credit Amount
for such Series; and
(vii) after giving effect to the inclusion of such
Vehicle under this Agreement, there shall not be a failure or
violation of any other conditions, requirements, or
restrictions with respect to the leasing of Eligible Vehicles
under this Agreement as is specified in the related Series
Supplement.
(b) No Default. No Potential Lease Event of Default or
Lease Event of Default shall have occurred and be continuing on such
date or would result from the making of such Master Lease Advance or
the lease of such Vehicle.
(c) Leases of Initial Fleet and other Refinanced
Vehicles. Only in connection with the leasing of Refinanced Vehicles
(including the Initial Fleet) and related Eligible Receivables on or
after the Lease Commencement Date, to evidence the refinancing of such
Refinanced Vehicles and related Eligible Receivables and the
conveyance of a security interest in such Refinanced Vehicles and
related Eligible Receivables to the Trustee, the applicable Lessees
shall have made available to the Lessor on or prior to the applicable
Vehicle Lease Commencement Date the following:
(i) a Refinancing Schedule concerning such
Refinanced Vehicles and related Eligible Receivables being
refinanced on such Vehicle Lease Commencement Date;
(ii) a report of the results of a search of the
appropriate records of the county (as applicable) and state
in which each such Lessee's principal place of business is
located, which shall show no Liens or other security
interests (other than Permitted Liens) with respect to such
Vehicles and the related Repurchase
-10-
16
Programs or, in the event that such search reveals any
non-permitted Lien or security interest, there shall be
delivered to the Lessor and the Trustee a termination of such
Lien or security interest together with appropriate UCC
termination statements or UCC partial releases thereof;
(iii) confirmation from each lender holding a
security interest in any such Refinanced Vehicle or Eligible
Receivable stating unconditionally (A) that, if any sums are
to be paid to such lender in connection with the lease of
such Refinanced Vehicle and the refinancing of the related
Eligible Receivables, such lender has been paid the full
amount due to it in connection with such refinancing and (B)
that any Lien or security interest of such lender in such
Refinanced Vehicle and/or Eligible Receivables, as
applicable, has been released;
(iv) a fully executed assignment agreement
granting and assigning to the Trustee (to the extent not
already granted and assigned) a first priority security
interest in each such Refinanced Vehicle and Eligible
Receivable, the related Repurchase Programs, if any, and any
other Group III Collateral relating to such Refinanced
Vehicles and Eligible Receivables;
(v) UCC termination statements terminating, or
UCC partial releases releasing, any security interests and
other liens (other than Permitted Liens) in favor of any
Person with respect to each Vehicle in the Initial Fleet
identified in such schedule and any related Repurchase
Programs;
(vi) delivery to the Lessor for filing in the
appropriate filing office fully executed UCC-1 Financing
Statements necessary to perfect (if not already perfected)
the interests of the Trustee in such Refinanced Vehicles and
Eligible Receivables;
(vii) with respect to any Vehicle in the Initial
Fleet, if the Trustee is not noted as lienholder on the
Certificate of Title for such Vehicle, delivery to the
Trustee of a Lienholder Nominee Agreement executed and
delivered by the named lienholder;
(viii) with respect to any Vehicle in the Initial
Fleet, if the Lessor is not noted as the titleholder on the
Certificate of Title for such Vehicle, delivery to the
Trustee of a Vehicle Title Nominee Agreement executed and
delivered by the named titleholder; and
(ix) an Officer's Certificate stating that all
the conditions precedent under this Agreement to the leasing
of such Refinanced Vehicles and financing of such Eligible
Receivables under this Agreement have been satisfied,
including a representation that each such receivable is an
Eligible Receivable and that the Lien
-11-
17
of the Trustee (or a Nominee) has been noted on the
Certificate of Title for each such Vehicle or such other
actions to cause the Trustee's Lien to be a perfected first
Lien have been taken by the Servicer.
(d) Leases of Financed Vehicles. Only in connection with
each lease of a Financed Vehicle after the Lease Commencement Date, to
evidence the acquisition or financing of such Financed Vehicle by the
Lessor and the conveyance of a security interest in such Financed
Vehicles to the Trustee, the Lessee thereof shall have delivered to
the Lessor on or prior to the applicable Vehicle Lease Commencement
Date, a Group III Vehicle Order (including a Group III Vehicle
Acquisition Schedule) with respect to all Financed Vehicles to be
leased to such Lessee by the Lessor on the date specified therein.
(e) Leases of Lessor-Owned Vehicles. Only in connection
with the lease of any Lessor-Owned Vehicle (other than Vehicles in the
Initial Fleet) to be leased on or after the Lease Commencement Date,
to evidence the leasing of such Lessor-Owned Vehicle under this
Agreement, the applicable Lessee shall have delivered to the Lessor on
or prior to the applicable Vehicle Lease Commencement Date, the
following:
(i) a Group III Vehicle Order (including a Group
III Vehicle Acquisition Schedule) with respect to all
Lessor-Owned Vehicles to be leased to such Lessee by the
Lessor on the Lease Commencement Date;
(ii) UCC termination statements terminating, or
UCC partial releases releasing, any security interests and
other Liens (other than Permitted Liens) in favor of any
Person with respect to each Lessor-Owned Vehicle identified
in such Group III Vehicle Order (and any related Repurchase
Programs).
(f) Eligible Vehicle. Each Vehicle to be leased hereunder
on such date shall be an Eligible Vehicle.
(g) Repurchase Vehicles. If such Vehicle is to be leased
as a Group III Repurchase Vehicle, the Lessor (if such Vehicle is a
Lessor-Owned Vehicle, a Texas Vehicle or a Hawaii Vehicle) or the
applicable Lessee (if such Vehicle is a Financed Vehicle other than a
Texas Vehicle or a Hawaii Vehicle) shall have delivered to the Trustee
(i) a fully executed Assignment Agreement covering such Vehicle, (ii)
the related Repurchase Program (which shall be an Eligible Repurchase
Program), and (iii) any other Group III Collateral relating to such
Vehicle.
(h) Series Supplement. The leasing of such Group III
Vehicle shall not be prohibited by the provisions of a Series
Supplement for a Group III Series of Notes.
-12-
18
(i) Other Conditions. The applicable Lessee shall have
complied with the applicable provisions of Sections 2.1 and 2.3 of
this Agreement.
Each Lessee hereby agrees that each such delivery of a Group III
Vehicle Order or Refinancing Schedule shall be deemed hereunder to constitute a
representation and warranty by it, to and in favor of the Lessor and the
Trustee, that all the conditions precedent to the acquisition and leasing of
the Vehicles identified in such Group III Vehicle Order or Refinancing Schedule
have been satisfied as of the date of such Group III Vehicle Order or
Refinancing Schedule.
30 TERM.
3.1 Vehicle Term: Group III Repurchase Vehicles. The "Vehicle
Lease Commencement Date" for each Group III Repurchase Vehicle and Eligible
Receivable shall mean the day referenced as such in the Group III Vehicle
Acquisition Schedule or Refinancing Schedule with respect to such Group III
Repurchase Vehicle or Eligible Receivable but in no event beyond the date that
funds are expended by the Lessor to acquire such Group III Repurchase Vehicle
or Eligible Receivable. The "Vehicle Term" with respect to each Group III
Repurchase Vehicle shall extend from the Vehicle Lease Commencement Date
through the earliest of (i) the Turnback Date for such Group III Repurchase
Vehicle, (ii) the date the Vehicle is sold to a third party through any means
other than an auction conducted by or through or arranged by the Manufacturer
pursuant to its Repurchase Program and the funds in respect of such sale are
received by the Trustee in the Group III Collection Account (from such third
party or from any member of the Lessee Group on behalf of such third party),
(iii) if such Vehicle becomes a Casualty, the date funds in the amount of the
Net Book Value thereof are received by the Trustee in the Group III Collection
Account from the applicable Lessee, (iv) the date that such Vehicle is
purchased by the applicable Lessee pursuant to paragraph 6 or 7 of Annex A 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 in the Group III Collection Account and (v) the maximum
vehicle lease term of the Operating Lease and the Financing Lease, as
applicable, as specified in, respectively, paragraph 5 of each of Annex A and
Annex B to this Agreement (the earliest of such five 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 deliver each Group
III Repurchase Vehicle (other than any such Group III Repurchase Vehicle that
has been redesignated as a Group III Non-Repurchase Vehicle pursuant to Section
14 hereof) to the related Manufacturer or the designated auction site, as
applicable, (a) not prior to the end of the minimum holding period specified in
the related Repurchase Program (prior to which the Lessor may not deliver such
Group III Repurchase 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 Group III Repurchase Vehicle which is a Lessor-Owned Vehicle
without penalty (the "Maximum Term"); provided, however, if for any reason, a
Lessee fails to deliver a Group III Repurchase Vehicle which is a Lessor-Owned
Vehicle to the applicable Manufacturer or designated auction site during the
time period between the expiration of the Minimum Term and the expiration of
the Maximum Term, such Lessee shall be obligated to (x) purchase such Group
-13-
19
III Repurchase 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 Group III Repurchase Vehicle, or (y) redesignate
such Group III Vehicle as a Group III Non-Repurchase Vehicle in accordance with
Section 14 hereof. Each Lessee will pay the equivalent of the Rent for the
Minimum Term for Group III Repurchase Vehicles which are Lessor-Owned Vehicles
and are returned before the Minimum Term, regardless of actual usage, unless a
Vehicle is a Casualty which will be treated in accordance with Section 6 hereof
or unless the Lessor immediately leases such Group III Repurchase Vehicle to
another Lessee under this Agreement or to a lessee under another Lease relating
to another Series under the Base Indenture.
3.2 Vehicle Term: Group III Non-Repurchase Vehicles. The "Vehicle
Lease Commencement Date" for each Group III Non-Repurchase Vehicle shall mean
the day referenced as such in the Group III Vehicle Acquisition Schedule or
Refinancing Schedule with respect to such Group III Non-Repurchase Vehicle but
in no event beyond the date that funds are expended by the Lessor to acquire
such Group III Non-Repurchase Vehicle. The "Vehicle Term" with respect to each
Group III Non-Repurchase Vehicle shall extend from the Vehicle Lease
Commencement Date through the earliest of (i) if the Group III Non-Repurchase
Vehicle is sold to a third party, the date such Vehicle is sold to such third
party and funds in respect of such sale are received by the Trustee in the
Group III Collection Account (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
Non-Repurchase Vehicle Value of such Group III Non-Repurchase Vehicle, (ii) if
the Group III Non-Repurchase Vehicle becomes a Casualty, the date funds in the
mount of the Non-Repurchase Vehicle Value thereof are received by the Trustee
in the Group III Collection Account from the applicable Lessee, (iii) the date
that the Group III Non-Repurchase Vehicle is purchased by the applicable Lessee
pursuant to Paragraph 6 or 7 of Annex A to this Agreement and the
Non-Repurchase Vehicle Value with respect to such purchase (and any unpaid
Monthly Base Rent and Monthly Variable Rent with respect to such Group III
Non-Repurchase Vehicle) is received by the Trustee and (iv) the maximum vehicle
lease term of the Operating Lease and the Financing Lease, as applicable, as
specified in, respectively, paragraph 5 of each of Annex A and Annex B to this
Agreement (the earliest of such four dates being referred to as the "Vehicle
Lease Expiration Date"); provided, however, that the Lessees shall use
commercially reasonable efforts to dispose of (a) each Group III Non-Repurchase
Vehicle, within twenty-four (24) months after the date of the original new
dealer invoice for such Vehicle or, where no such invoice exists, the date such
Vehicle was first put into service, or (b) with respect to any Vehicle, such
longer period with respect to which Rating Agency Confirmation has been
obtained or, if no Rating Agency is then currently requested to rate any Group
III Series of Notes, approved by Noteholders of the Group III Series of Notes
holding more than 50% of the aggregate Invested Amounts of all outstanding
Group III Series (the "Majority Group III Noteholders") (such period described
in clauses (a), (b), (c) and (d) above, the "Non-Repurchase Maximum Term"). If
a Group III Vehicle's age is unknown as of its Vehicle Lease Commencement Date,
such age (in months) shall be the lesser of (i) the number obtained by dividing
the number of miles on the odometer of such Group III Vehicle at the Vehicle
Lease Commencement Date by 1500 and (ii) the number of months in the period
commencing on September 1 of the calendar year prior to the model year of
-14-
20
such Group III Vehicle through the Vehicle Lease Commencement Date for such
Group III Vehicle.
3.3 The "Lease Commencement Date" shall mean the earlier of (i)
the date of the issuance of the Series 2000-2 Notes as the first Group III
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
included in the Group III Series of Notes and all outstanding Carrying Charges
and (ii) the Vehicle Lease Expiration Date for the last Group III Vehicle
leased by a Lessee hereunder. The "Term" of this Agreement shall mean the
period commencing on the Lease Commencement Date and ending on the Lease
Expiration Date.
40 RENT AND CHARGES. Each Lessee will pay Rent on a monthly basis
as set forth in this Section 4:
4.1 Payment of Rent. On each Due Date, each Lessee shall pay to
the Lessor the aggregate of all Rent that has accrued during the Related Month
with respect to the Vehicles leased by such Lessee under this Agreement, as
provided in the related Lease Annexes.
4.2 Payment of Monthly Supplemental Payments. On each Due Date,
each Lessee shall pay to the Lessor the Monthly Supplemental Payments that have
accrued during the Related Month with respect to the Financed Vehicles leased
by such Lessee under this Agreement, as provided in paragraphs 6 and 8 of Annex
B to this Agreement.
4.3 Payment of Supplemental Rent. On each Due Date, each Lessee
shall pay to the Lessor such Lessee's pro rata share (on the basis of the
aggregate Net Book Value of Group III Vehicles leased by such Lessee during the
Related Month) of the Monthly Supplemental Rent due on such Due Date. "Monthly
Supplemental Rent" with respect to each Due Date shall equal (x) the accrued
interest on all Outstanding Notes included in the Group III Series of Notes for
the Related Month, plus (y) the Carrying Charges for the Related Month
allocable to any Group III Series of Notes, minus (z) the aggregate of all
Monthly Variable Rent and Monthly Finance Rent accrued with respect to the
Related Month for all Group III Vehicles leased hereunder.
4.4 Payment of Termination Payments, Casualty Payments, and Late
Return Payments. On each Due Date, each Lessee shall pay to the Lessor all
Casualty Payments, Termination Payments and Late Return Payments that have
accrued with respect to the Group III Vehicles leased by such Lessee under this
Agreement, as provided in, respectively, Sections 6.1, 11.3 and 12.
4.5 Late Payment. In the event the relevant Lessee fails to remit
payment of any amount due on or before the Due Date, the 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.
-15-
21
4.6 Prepayments. To the extent provided in Paragraph 9(b)(iii) of
Annex A and Paragraph 6(d) of Annex B, a Lessee may prepay to the Lessor, in
whole or in part, the Rent or other payments accrued during the Related Month
with respect to any Group III Vehicles leased by such Lessee under this
Agreement.
50 INSURANCE. Budget represents that it shall at all times
maintain insurance coverage for each Lessee in accordance with the applicable
state law requirements and other requirements as set forth below. Each
Non-Budget Lessee represents that it shall at all times maintain insurance
coverage for itself in full force and effect in accordance with the appropriate
states' requirements and other requirements as set forth below. Budget, each
Lessee and each Non-Budget Lessee agree that the Lessor shall be entitled to
the benefits of any such insurance at all times during the term of this Lease.
5.1 Personal Injury and Damage. Subject to applicable state and
other requirements, Budget and each Non-Budget Lessee may self-insure against
personal injury and damage claims arising from the use of the Vehicles as well
as damage to Group III Vehicles.
5.2 Delivery of Certificate of Insurance. Within 10 days after (i)
the Closing Date with respect to each Series of Notes included in the Group III
Series of Notes or (ii) with respect to any additional party becoming a
"Lessee" hereunder pursuant to the provisions of Section 23 hereof, within 10
days after such party becomes a "Lessee," hereunder), Budget, on behalf of the
Lessees, and each Non-Budget Lessee shall deliver to the Lessor a certificate
of insurance naming the Lessor and the Trustee as additional insured as to the
items referenced by Section 5.1 hereinabove or a written statement to the
effect that such Lessee is self insuring. 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 Guarantor or the applicable Non-Budget Lessee
shall deliver not less than 30 days prior written notice of any
proposed change in such insurance to the Trustee and each Rating
Agency, which notice shall contain a certification of a reputable
insurance broker that is not affiliated with any member of the Lessee
Group that the insurance program maintained by Budget, on behalf of
the Lessees, and by each Non-Budget Lessee (after the taking effect of
such proposed change) comports with industry standards for Persons
engaged in the business of renting similar vehicles and having net
worth and operating income similar to that of such member of the
Lessee Group; and
-16-
22
(ii) So long as a Rating Agency is then currently
requested to rate any Group III Series of Notes or any class thereof,
the Guarantor shall furnish to the Trustee a letter from each Rating
Agency with respect to the outstanding Notes in the Group III Series
of Notes to the effect that such proposed change in insurance will not
cause a reduction in or a withdrawal of such rating.
60 CASUALTY OBLIGATION.
6.1 Casualty. If a Group III Vehicle becomes a Casualty, then the
Lessee that is leasing such Group III Vehicle will (i) promptly notify the
Lessor thereof and (ii) in the case of a Lessor-Owned Vehicle, promptly, but in
no event later than the first Due Date after the end of the Related Month in
which such Group III Vehicle becomes a Casualty, pay to the Lessor the Net Book
Value of each such Group III Vehicle that is a Group III Repurchase Vehicle,
the Non-Repurchase Vehicle Value of each such Vehicle that is a Group III
Non-Repurchase Vehicle (such payment, a "Casualty Payment"). Upon payment by
the Lessee to the Lessor of the Casualty Payment for any Group III Vehicle that
has become a Casualty (i) the Lessor shall cause title to such Group III
Vehicle to be transferred to the relevant Lessee to facilitate liquidation of
such Group III Vehicle by the Lessee, (ii) such Lessee shall be entitled to any
physical damage insurance proceeds applicable to such Group III Vehicle, and
(iii) the Lien of the Trustee on such Group III Vehicle shall be released by
the Servicer.
70 VEHICLE USE. So long as no Lease Event of Default, Liquidation
Event or Limited Liquidation 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 Paragraph 7 of Annex A), such Lessee may use Group III
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 Group III Vehicles is located
in the United States. The relevant Lessee shall promptly and duly execute,
deliver, file 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 Group III
Vehicles and the related 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 Group III Vehicles and the related
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 Group III 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 Group III Vehicles and
the related Certificates of Title shall have been taken and (ii) all legal
requirements applicable to such Group III Vehicles shall have been met or
obtained. Following a Lease Event of Default, Lessee Partial Wind-Down Event,
or, with respect to the Group III Repurchase Vehicles, a Manufacturer Event of
Default, and upon the Lessor's request, the relevant Lessee shall advise the
Lessor in writing where all Group III Vehicles leased by such Lessee as of such
date are principally located. The Lessee shall not knowingly use any Group III
-17-
23
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 Group
III Vehicles. Each Lessee shall comply with all applicable statutes, decrees,
ordinances and regulations regarding acquiring, titling, registering, leasing,
insuring and disposing of Group III Vehicles and shall take reasonable steps to
ensure that drivers of such Group III Vehicles are duly licensed to drive in
accordance with applicable law. Each Lessee and the Lessor agree that each
Lessee shall perform, at its own expense, such Vehicle preparation and
conditioning services with respect to Group III Vehicles purchased by the
Lessor from the Manufacturers as are customary. The Lessor, 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 Group III Vehicles and registration
certificates, Certificates of Title and related documents covering Group III
Vehicles wherever the same shall be located. Group III Vehicles leased
hereunder may be subleased by the applicable Lessee to any other Lessee listed
on Schedule 1 to this Agreement or added as a Lessee pursuant to Section 23 of
this Agreement; provided, however, that neither the original Lessee nor the
Guarantor shall be released from any of its obligations in respect of any Group
III Vehicle so subleased.
80 REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES.
The Lessee Group, at its expense, shall be responsible for proper registration
and licensing of Group III Vehicles, and titling of Group III Vehicles in the
name of the Lessor (in the case of Lessor-Owned Vehicles, Texas Vehicles and
Hawaii Vehicles) or the applicable Lessee (in the case of all Financed Vehicles
other than Texas Vehicles and Hawaii Vehicles), in each case with the Lien of
the Trustee noted thereon, and, where required, shall have Group III Vehicles
inspected by any appropriate Governmental Authority; provided, however, that
notwithstanding the foregoing, all Certificates of Title shall at all times
remain in the custody of the Servicer in accordance with the provisions of the
Base Indenture. The Lessee leasing such Group III 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 Group
III Vehicle during the Vehicle Term for such Group III Vehicle or imposed
during the Vehicle Term for such Group III Vehicle by any Governmental
Authority or any court of law or equity with respect to Group III Vehicles in
connection with the relevant Lessee's operation of Group III Vehicles, and the
Lessor, in its discretion, may, but shall not be obligated to, pay any such
amounts on the Lessee's behalf if the Lessee's failure to pay the same
interferes with the free transferability or saleability of such Group III
Vehicle or impairs the ability to transfer clear title to such Group III
Vehicle; and any such amounts paid by the Lessor 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 Lessor-Owned Vehicles and the
Texas Vehicles and Hawaii Vehicles; provided, however, that possession of all
Certificates of Title shall at all times remain with the applicable Servicer in
accordance with the provisions of the Indenture and each Lessee acknowledges
and agrees that, with respect to the Lessor-Owned Vehicles, it has no right,
title or interest in or with respect to any Certificate of
-18-
24
Title. Notwithstanding anything herein to the contrary, the Lessor may
terminate such Power of Attorney as provided in Section 19 hereof.
90 MAINTENANCE AND REPAIRS. Each Lessee shall pay for all
maintenance and repairs to keep Group III Vehicles in good working order and
condition, and will maintain Group III Vehicles as required in order to keep
the Manufacturer's warranty in force, and in the case of Group III Repurchase
Vehicles, shall comply with all requirements of the related Repurchase Program
to the extent necessary to maintain the eligibility of such Group III Vehicles.
Each Lessee will return Group III 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
Group III Vehicle. Each Lessee will pay, or cause to be paid, all usual and
routine expenses incurred in the use and operation of Group III 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
Group III 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. No Lessee shall make any material
alterations to any Group III Vehicles without the prior consent of the Lessor.
Any improvements or additions to any Lessor-Owned Vehicle shall become and
remain the property of the Lessor, except that any addition to such a Group III
Vehicle made by the relevant Lessee shall remain the property of such Lessee if
it can be disconnected from the Group III Vehicle without impairing the
functioning or resale value thereof, other than any function or value provided
by such addition or improvement.
100 VEHICLE WARRANTIES. If a Group III 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 and to
receive related proceeds directly. As provided in Section 2.4, the Lessor makes
no warranty or representation whatsoever, express or implied, with respect to
any Group III Vehicle.
110 VEHICLE RETURN GUIDELINES.
11.1 Vehicle Turn-in-Condition. As used herein "vehicle turn-in
condition" with respect to each Group III Repurchase Vehicle will be determined
in accordance with the related Repurchase Program. Group III Repurchase
Vehicles not meeting the applicable Repurchase Program's vehicle turn-in
condition guidelines will, unless redesignated as Group III Non-Repurchase
Vehicles in accordance with Section 14 hereof, be purchased by the relevant
Lessee in accordance with the Casualty procedure set forth in Section 6.1.
11.2 Return. Each Lessee will return each Group III Repurchase
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 prior to the expiration of the Maximum Term for such
Group III Vehicle. Each Lessee agrees that the Group III Repurchase Vehicles
will be in
-19-
25
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 Group III Repurchase Vehicle shall inure to the benefit of the relevant
Lessee. Each Lessee agrees to use commercially reasonable efforts to dispose of
each Group III Non-Repurchase Vehicle (a) in a manner most likely to maximize
proceeds from such disposition and consistent with industry practice and (b)
prior to the expiration of the Non-Repurchase Maximum Term for such Group III
Non-Repurchase Vehicle.
11.3 Termination Payments. Upon receipt of (i) payment of the
Repurchase Price or Guaranteed Payment with respect to each Group III
Repurchase Vehicle from the Manufacturer (or the receipt of payment of the
Repurchase Price of each Group III Repurchase 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 or (ii) the net proceeds from the sale of any
Group III Repurchase Vehicle, the Lessor will charge the relevant Lessee for
any damage charges or mileage charges as determined by the Lessor in its
reasonable judgment (any such charges in (i) or (ii) are referred to as a
"Termination Payment"). The provisions of this Section 11.3 will survive the
expiration or earlier termination of the Term.
11.4 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 Group III Repurchase Vehicle for the
period between the Turnback Date for such Group III Vehicle and receipt of such
Repurchase Price by the Lessor from the Manufacturer ("Repurchase Price
Interest"). The provisions of this Section 11.4 will survive the expiration or
earlier termination of the Term.
120 DISPOSITION PROCEDURE. Each Lessee will comply with the
requirements of law and, with respect to Group III Repurchase Vehicles, 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 in connection with the sale of any Group III Vehicle to a third party
or the return of any Group III Repurchase Vehicle in accordance with an
Eligible Repurchase Program. In addition, with respect to the return of a Group
III Repurchase Vehicle to a Manufacturer or the delivery of a Group III
Repurchase Vehicle to an authorized auction site, the Lessee thereof shall also
deliver a signed Condition Report and signed odometer statement to be submitted
with such Group III Repurchase Vehicle and accepted by the Manufacturer or its
agent at the time of Group III Repurchase Vehicle return or delivery, as
applicable. If a Group III Repurchase Vehicle is not returned to the
Manufacturer and accepted by the Manufacturer, or delivered to (and accepted
by) an authorized auction site, prior to the expiration of the Maximum Term
with respect to such Group III Repurchase Vehicle, the relevant Lessee shall,
unless such Group III Repurchase Vehicle has been redesignated as a Group III
Non-Repurchase Vehicle in accordance with Section 14 hereof, purchase such
Group III Repurchase Vehicle for the appropriate Vehicle Purchase Price and pay
the Lessor such amount (such amount, the "Late
-20-
26
"Late Return Payment") 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).
130 ODOMETER DISCLOSURE REQUIREMENT. Each Lessee agrees to comply
with all requirements of law and, with respect to Group III Repurchase Vehicles,
all Repurchase Program requirements in connection with the transfer of ownership
of any Group III Vehicle by the Lessor, including, without limitation, the
submission of any required odometer disclosure statement at the time of any such
transfer of ownership.
140 REDESIGNATION OF VEHICLES. (a) Upon a Group III Repurchase
Vehicle's becoming ineligible for repurchase by its Manufacturer or for sale in
accordance with applicable Repurchase Program procedures, due to physical
damage, repair charges or accrued mileage, in each case in excess of that
permitted under the related Repurchase Program, or due to any failure or
inability to return such Group III Vehicle to the Manufacturer or the
designated auction site prior to the expiration of the Maximum Term, or due to
any other event or circumstance, the Servicer may designate such Vehicle as a
Group III Non-Repurchase Vehicle if such Group III Vehicle, as a Group III
Non-Repurchase Vehicle, will be an Eligible Non-Repurchase Vehicle and if
either (a) such designation meets the applicable conditions of Section 2.5
hereof or (b) the Noteholders holding the requisite Invested Amount of each
applicable Series of Notes included in the Group III Series of Notes waive, in
each case as and to the extent permitted under the related Series Supplement,
the requirements of Section 2.5 as applied to this Section 14 and all such
other conditions, requirements or restrictions with respect to which a failure
or violation has occurred; provided, in each case, that (x) any additional
Monthly Base Rent due with respect to each such Group III Vehicle, relating to
the decrease, if any, of the Net Book Value of such Group III Vehicle under the
newly applicable Depreciation Schedule, shall be paid by the applicable Lessee
on the next succeeding Due Date, and (y) the minimum level of Enhancement
required under the applicable Series Supplement, after giving effect to such
designation, shall be satisfied on the date of designation.
(b) The Servicer may designate a Group III Non-Repurchase Vehicle
as a Group III Repurchase Vehicle if such Group III Vehicle, as a Group III
Repurchase Vehicle, will be an Eligible Repurchase Vehicle and if either (a)
such designation meets the applicable conditions of Section 2.5 hereof or (b)
the Noteholders holding the requisite Invested Amount of each applicable Series
of Notes included in the Group III Series of Notes waive, in each case as and to
the extent permitted under the related Series Supplement, the requirements of
Section 2.5 as applied to this Section 14 and all such other conditions,
requirements or restrictions with respect to which a failure or violation has
occurred; provided, however, that (i) the Capitalized Cost, Net Book Value and
Depreciation Charges with respect to such Vehicle shall be recalculated as of
the date of such redesignation as if such Group III Vehicle were a Group III
Repurchase Vehicle at the time of the initial related Vehicle Lease Commencement
Date, and (ii) the related Manufacturer has acknowledged such designation. Upon
any redesignation of a Vehicle pursuant to this Section 14(b), (x) the Lessor
shall advance to the applicable Manufacturer the difference (if any) between the
original Capitalized Cost of such Vehicle and the Capitalized Cost of such
-21-
27
Vehicle upon redesignation, to the extent that such amount is then due and
payable to the Manufacturer, which amount shall be deemed to be part of the
Capitalized Cost of such Vehicle and (y) the applicable Lessee shall be entitled
to a credit against the Monthly Base Rent due on the next succeeding Due Date in
an amount equal to the excess (if any) of the Net Book Value of such Vehicle
upon such redesignation over the Net Book Value of such Vehicle immediately
prior to such redesignation.
150 GENERAL INDEMNITY.
15.1 Indemnity by the Lessees.1 Indemnity by the Lessees. 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:
15.1.1 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 Group III
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);
15.1.2 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
Group III Vehicle or the acquisition, purchase, sale, rental, use,
operation, control, ownership or disposition of any Group III 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;
15.1.3 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 or licenses of any
governmental or public body or authority and all other requirements
having the force of law applicable at any time to any Group III
Vehicle or any action or transaction by such member of the Lessee
Group with respect thereto or pursuant to this Agreement;
-22-
28
15.1.4 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 for the benefit of the
Holders of Notes included in the Group III Series of Notes, any and
all fees of the Servicer under the Indenture (to the extent
attributable to any Group III Series of Notes), fees, if any, payable
to the Rating Agencies in connection with their rating of any Group
III Series of Notes or any class thereof and any underwriting or
placement agency fees, if any, incurred in connection with the sale of
any Group III Series of Notes or any class thereof;
15.1.5 all out-of-pocket costs and expenses (including
reasonable attorneys, fees and legal expenses) incurred by the Lessor,
the Trustee or the Holders of Notes included in the Group III Series
of Notes 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
15.1.6 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, with respect to Group III Repurchase Vehicles in
connection with any audit or investigation conducted by a Manufacturer
under its Repurchase Program).
15.2 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 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 III 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 15 shall survive the expiration or earlier termination of this Agreement
or any lease of any Group III Vehicle hereunder.
15.3 Defense of Claims. Defense of any claim referred to in this
Section 15 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
-23-
29
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 Group III 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.
160 ASSIGNMENT.
16.1 Right of the Lessor to Assign this Agreement. The Lessor shall
have the right to finance the acquisition and ownership of Group III 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 Lessor-Owned Vehicles as set forth
in Section 12 of Annex A to this Agreement, and under this Agreement.
16.2 Limitations on the Right of the Lessee to Assign this
Agreement. No Lessee shall, 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 vehicles under the terms of such Lessee's normal daily rental programs.
Any purported assignment in violation of this Section 16.2 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.
170 DEFAULT AND REMEDIES THEREFOR.
17.1 Lease 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:
17.1.1 Payment Default. There occurs (i) a default in the
payment of any Monthly Base Rent and the continuance thereof for a
period of two Business Days, (ii) a default in the payment of any
Monthly Variable Rent, Monthly Finance Rent, Monthly Supplemental
-24-
30
Rent, Additional Base Rent or Monthly Supplemental Payment, and the
continuance thereof for five Business 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 III the payment of any
amount payable under this Agreement (other than amounts described in
clause (i) or (ii) above);
17.1.2 Unauthorized Assignment. Any unauthorized assignment
or transfer of this Agreement by any member of the Lessee Group occurs;
17.1.3 Breach of Contract. Subject to the provisions of
Section 19 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 (other than one
described in Section 17.1.1 or 17.1.2), 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;
17.1.4 Breach of Representation or Warranty. Subject to the
provisions of Section 19 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;
17.1.5 Event of Bankruptcy. Subject to the provisions of
Section 19 hereof regarding Lessee Partial Wind-Down Events, an Event
of Bankruptcy occurs with respect to any member of the Lessee Group;
17.1.6 Default Under Another Lease. A Lease Event of Default
occurs under the Amended and Restated Motor Vehicle Lease Agreement,
dated as of December 1, 1996, the Motor Vehicle Lease Agreement,
Series 1997-1, dated as of April 1, 1997, the Motor Vehicle Lease
Agreement, Series 1997-2, dated as of April 29, 1997, the Amended and
Restated Master Motor Vehicle Lease Agreement Group I, dated as of
June 19, 1998, the Amended and Restated Master Motor Vehicle Lease
Agreement Group II, dated as of February 25, 2000 or any other Lease
with respect to which Budget is a guarantor;
-25-
31
17.1.7 Required Credit Support Amount. The Credit Support
Amount for any Group III Series of Notes shall be less than the
Minimum Credit Support Amount for such Series and such condition shall
continue to exist for more than one Business Day; or
17.1.8 Letter of Credit Reimbursement Agreement. An event of
default occurs under the Letter of Credit Reimbursement Agreement for
any Group III Series of Notes which continues beyond any applicable
cure period specified in such Letter of Credit Reimbursement
Agreement.
17.2 Effect of Lease Event of Default. If (i) a Lease Event of
Default described in Section 17.1.1, 17.1.2, 17.1.5, 17.1.7 or 17.1.8 shall
occur, then the Monthly Base Rent, Casualty Payments, the Monthly Supplemental
Payments (calculated as if all Financed Vehicles had become a Casualty for the
Related Month), the Monthly Variable Rent and Monthly Finance Rent (calculated
as if the full amount of interest, principal and other charges under all
Outstanding Group III Series of Notes were then due and payable in full), the
Monthly Supplemental Rent (calculated as if the full amount of interest,
principal and other charges under all Outstanding Group III Series of Notes were
then due and payable in full) and, with respect to Group III Non-Repurchase
Vehicles, the Additional Base Rent, if any, 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 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 17.5, become immediately due and payable.
17.3 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 17.5; 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 Group III Vehicles, and the Lessor may direct delivery by the
Lessee Group (or the applicable member(s) thereof) of documents of
title to the Group III Vehicles, whereupon all rights and interests of
the Lessee Group (or the applicable member(s) thereof) to the Group
III Vehicles will cease and terminate (but the Lessee Group (or the
applicable member(s) thereof) will remain liable hereunder as herein
provided; provided, however, the Lessee Group's liability will
-26-
32
be calculated in accordance with Section 17.5); and thereupon, the
Lessor or its agents may peaceably enter upon the premises of the
applicable Lessee(s) or other premises where the Group III 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 Group III 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 17.2 (as limited by Section 17.5) 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 Group
III Vehicle(s) at the sale. Each and every power and remedy hereby
specifically given to the 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 17.5. 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 herein; 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.
17.4 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 or a Limited
Liquidation Event of Default or, with respect to Group III Repurchase
Vehicles, a 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 in connection with any Manufacturer Event of Default
and the Collateral provided in the Indenture (including, without
limitation, in connection with a Manufacturer Event of Default, the
rights granted under Section 9.3 of the Indenture) upon a Liquidation
Event
-27-
33
of Default or Limited Liquidation Event of Default, including the right
to take possession of all Group III Vehicles immediately from the
Lessees.
(ii) With respect to Group III Repurchase Vehicles, if the
Guarantor or any Lessee shall default in the due performance and
observance of any of its obligations under Section 29.3, 29.4,
29.5(iv), 29.8, 30.3 or 30.4 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,
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) Group III
Repurchase Vehicles that 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 Group III Repurchase Vehicles, any such Group III
Repurchase 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 Group III Vehicles free
of Liens and to maintain the Trustee's Lien perfected on the Group III
Collateral, the Trustee shall have the right to take actions reasonably
necessary to correct such default with respect to the subject Group III
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 Group III Repurchase Vehicles to the related
Manufacturer in accordance with the instructions of the Lessor.
(v) Upon the occurrence of a Liquidation Event of Default
or Limited Liquidation Event of Default, the Lessor shall have the
right to dispose of (x) those Group III Repurchase Vehicles not
accepted by the related Manufacturer under the applicable Repurchase
Program pursuant to clause (iv) above and (y) all Group III
Non-Repurchase Vehicles and to direct the Guarantor or the applicable
Lessee to dispose of such Group III 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 Section 9.2 and, with respect to Group III Repurchase
Vehicles, Section 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
-28-
34
Trustee may act in lieu of the Lessor in the exercise of such rights,
remedies, powers, privileges and claims.
17.5 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 remedies granted to the Lessor or the Trustee under
this Article 17, 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 17.2); 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 16, 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 Group III Vehicles leased
hereunder (either by receipt of payment from the Manufacturers under
Repurchase Programs, from sales of Group III Vehicles to third parties,
or otherwise); provided, however, if an Eligible Repurchase 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 Group III Repurchase 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 (v) an amount equal to the Net Book Value of
such Group III Repurchase 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 Group III Repurchase
Vehicle).
17.6 Application of Proceeds. The proceeds of any sale or other
disposition pursuant to Section 17.3 or 17.4 shall be applied in the following
order: (i) to the reasonable costs and
-29-
35
expenses incurred by the Lessor in connection with such sale or disposition,
including any reasonable costs associated with repairing any Group III 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 Monthly Variable Rent and Monthly Finance Rent, then to
outstanding Monthly Supplemental Rent, then to outstanding Monthly Base Rent,
and then, with respect to proceeds related to any Group III Non-Repurchase
Vehicles, to outstanding Additional 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.
18. 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 20 hereof regarding
Eligibility Waiver Events), the relevant Lessee on behalf of the Lessor (a)
shall no longer place Group III Vehicle Orders from such Manufacturer (each, a
"Defaulting Manufacturer") for (x) any additional Group III Vehicles in the
event of any Manufacturer Event of Default arising under Section 18.1 or 18.3,
(y) any additional Group III Repurchase Vehicles in the event of any
Manufacturer Event of Default arising under Section 18.2, 18.4(i) or 18.5, and
(z) any additional Group III Non-Repurchase Vehicles in the event of any
Manufacturer Event of Default arising under Section 18.4(ii) and (b) shall
cancel any Group III Vehicle Order with such Defaulting Manufacturer to which a
VIN has not been assigned as of the date such Manufacturer Event of Default
occurs:
18.1 The failure of such Manufacturer to pay any amount when due
pursuant to the related Repurchase Program with respect to a Repurchase Vehicle
(whether Group III Repurchase Vehicles or otherwise) turned in to such
Manufacturer or delivered to an authorized auction site pursuant to the related
Repurchase Program; 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 for more than 90 days are in the aggregate in excess
of $40,000,000 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
Repurchase Vehicles tendered for repurchase, or delivered to an authorized
auction site, under a Repurchase Program.
18.2 The termination of such Manufacturer's Repurchase Program
(subject to the provisions of Section 20 hereof regarding Eligibility Waiver
Events).
18.3 The occurrence of an Event of Bankruptcy with respect to such
Manufacturer.
18.4 Such Manufacturer is no longer (i) an Eligible Manufacturer in
the case of Group III Repurchase Vehicles, or (ii) Eligible Non-Repurchase
Manufacturer, in the case of Group III Non-Repurchase Vehicles.
-30-
36
18.5 The Repurchase Program of a Manufacturer shall no longer be an
Eligible Repurchase Program (subject, in each case, to the provisions of Section
20 hereof regarding Eligibility Waiver Events).
19. LESSEE PARTIAL WIND-DOWN EVENTS. Upon the occurrence of any of
the events described in Sections 17.1.4, 17.1.5, or 17.1.6 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 Group III Vehicle Orders for additional Group III
Vehicles and (b) shall cancel Group III Vehicle Orders for Vehicles; provided,
however, that if a Group III Vehicle Order has been placed for a Lessor-Owned
Vehicle and the related Manufacturer has assigned a VIN as of the date such
Lessee Partial Wind-Down Event occurs, then such Group III Vehicle Order will
not be canceled. 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 17.3 or 17.4 hereof and (ii)
terminate the Power of Attorney with respect to such Defaulting Lessee.
20. ELIGIBILITY WAIVER EVENTS. In the event that a Manufacturer
Event of Default occurs by reason of an event stated in Section 18.2 or 18.5 (a
"Manufacturer Wind-Down Event"), then if (i) the Series Supplement for any Group
III 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 each Group III Series of
Notes waives such Manufacturer Wind-Down Event, the Lessees may continue to
place Vehicle Orders for the purchase of Group III Repurchase Vehicles or Group
III Non-Repurchase Vehicles from such Defaulting Manufacturer through this
Agreement; provided, however, the total Net Book Value of all Group III
Repurchase Vehicles leased hereunder through any Defaulting Manufacturer shall
not exceed the Maximum Defaulting Manufacturer Percentage of the Net Book Value
of all Group III Repurchase Vehicles leased under this Agreement; and, provided,
further, that in the event a Lessee seeks any such waiver of a Manufacturer
Wind-Down Event such Lessee shall in connection therewith propose a Maximum
Defaulting Manufacturer Percentage for such Defaulting Manufacturer and the
resulting Maximum Defaulting Manufacturer Percentage shall equal that percentage
of the proposed Maximum Defaulting Manufacturer Percentage which corresponds to
the percentage of Noteholders which consent to such waiver. Any such waiver by
any such Requisite Noteholders shall be referred to as an "Eligibility Waiver
Event."
21. CERTIFICATION OF TRADE OR BUSINESS USE. Each Lessee hereby
warrants and certifies, under penalties of perjury, that (1) such Lessee intends
to use the Lessor-Owned Vehicles leased by such Lessee hereunder 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 such Lessor-Owned Vehicles for federal income tax
purposes.
22. 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
-31-
37
taxes pursuant to any provision hereof, such liability will continue,
notwithstanding the expiration or termination of this Agreement, until all such
amounts are paid or reimbursed by such Lessee.
23. ADDITIONAL LESSEES. Any Affiliate of or direct or indirect
Subsidiary of the Guarantor (each, a "Guarantor Subsidiary") or any party that
is not an Affiliate of the Guarantor (each, a "Non-Affiliate") shall, with the
consent of the Guarantor, have the right to become a "Lessee" under and pursuant
to the terms of this Agreement by complying with the provisions of this Section
23. In the event a Guarantor Subsidiary or Non-Affiliate desires to become a
"Lessee" under this Agreement, then the Guarantor and such party shall execute
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 party, duly
certified by the Secretary of State of the jurisdiction of such party's
incorporation, together with a copy of the by-laws of such party, duly
certified by a Secretary or Assistant Secretary of such party;
(iii) copies of resolutions of the Board of Directors of
such party 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 party;
(iv) a certificate of the Secretary or Assistant Secretary
of such party certifying the names of the individual or individuals
authorized to sign the Joinder in Lease 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 party 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 party 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 party
that purport to affect any Group III Vehicles leased hereunder or any
Collateral under the Indenture;
(vii) evidence of the filing of proper financing statements
on Form UCC-1 naming such party, as debtor, and the Lessor as secured
party covering the collateral described in Section 2(b) hereof;
-32-
38
(viii) an Officers' Certificate and an opinion of counsel
each stating that such joinder by such party complies with this Section
23 and that all conditions precedent herein provided for relating to
such transaction have been complied with or waived in accordance
herewith;
(ix) Rating Agency Confirmation that such party 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 party of the
obligations and liabilities set forth in this Agreement.
Upon satisfaction of the foregoing conditions and receipt by such Guarantor
Subsidiary or Non-Affiliate of the applicable Joinder in Lease executed by the
Lessor, such Guarantor Subsidiary or Non-Affiliate shall for all purposes be
deemed to be a "Lessee" for purposes of this Agreement (including, without
limitation, the Guaranty) and shall be entitled to the benefits and subject to
the liabilities and obligations of a Lessee hereunder.
24. GUARANTY.
24.1 Guaranty. In order to induce the Lessor to execute and deliver
this Agreement and to lease Group III Vehicles to the Lessees, and in
consideration thereof, the Guarantor hereby (i) unconditionally and irrevocably
guarantees to the Lessor the obligations of the Lessees (including, without
limitation, any additional Lessees pursuant to Section 23) 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
under the guaranty contained in this Section 24 (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.
24.2 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
-33-
39
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. 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.
24.3 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 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.
24.4 Waiver of Certain Rights by Guarantor. The Guarantor hereby
waives each of the following to the fullest extent allowed by law:
(a) any defense based upon:
(i) the unenforceability or invalidity of 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;
(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;
provided that the Guarantor's liability in respect of this
Guaranty shall be released to the extent the Lessor
voluntarily releases such Lessee or other Person from any
obligations with respect to any of the foregoing; 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
-34-
40
operation of law or any bankruptcy, insolvency or
debtor-relief proceeding, or from any other cause;
(b) 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;
(c) 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 participate in, any
security now or hereafter held by the Lessor with respect to the
Guaranteed Obligations;
(d) presentment, demand, protest and notice of any kind,
including without limitation notices of default and notice of
acceptance of this Guaranty;
(e) all suretyship defenses and rights of every nature
otherwise available under New York law and the laws of any other
jurisdiction; and
(f) all other rights and defenses the assertion or
exercise of which would in any way diminish the liability of the
Guarantor hereunder.
24.5 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 prior payment in full of
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 24.5, 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 marshaling of the assets and
liabilities of the Guarantor or such Lessee, or otherwise:
-35-
41
(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 or 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 receiver or liquidating trustee, or otherwise, directly to
the Trustee, for the benefit of 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 in an interest bearing
account of the Guarantor or such Lessee, as appropriate, and
immediately paid over in kind to the holders of the Guaranteed
Obligations 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
-36-
42
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 the name of such Lessee or the Guarantor,
as the case may be.
24.6 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%.
24.7 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.
24.8 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.
25. 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 for the benefit of the Holders of Notes included in the Group III
Series of Notes. 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 with respect to any Group III Series of Notes or, subject to the
provisions of Section 19 hereof, a Lessee Partial Wind-Down Event or,
with respect to Group III Repurchase Vehicles, subject to the
provisions of Section 20, 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
-37-
43
member of the Lessee Group will 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; and
(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 Group III Vehicles leased under this
Agreement, the Certificates of Title with respect thereto, the Group
III 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, with respect to
the Operating Lease, in the event that this Agreement is
recharacterized as described in such Section 2(b)).
26. 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 servicing rights and obligations under
Sections 8 and 9 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.
-38-
44
27. 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, each Enhancement Provider
with respect to any Group III Series of Notes and, if the Series 2000-2 Notes
are still outstanding, any Series 2000-2 Noteholder. 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, and to any Noteholder for each Group III Series of Notes in
respect of which no Rating Agency is then currently requested to provide
ratings, of any such waiver, modification or amendment. Notwithstanding the
foregoing provisions of this Section 27, the Lessor, the Lessees and the
Guarantor may, at any time and from time to time, without the consent of the
Trustee, any Noteholders or any Enhancement Provider, enter into any amendment,
supplement or other modification to this Agreement to cure any apparent
ambiguity or to correct or supplement any provision in this Agreement that may
be inconsistent with any other provision herein; provided, however, that (i) any
such action shall not have a materially adverse effect on the interests of any
Enhancement Provider for a Group III Series of Notes based upon an Opinion of
Counsel and an Officers' Certificate of the Lessor and each Lessee addressed to
the Trustee and (ii) a copy of such amendment, supplement or other modification
is furnished to the Trustee, each Enhancement Provider with respect to any Group
III Series of Notes in accordance with the notice provisions of the related
Series Supplement not later than ten days prior to the execution thereof by the
Lessor, the Lessees and the Guarantor.
28. CERTAIN REPRESENTATIONS AND WARRANTIES. Each Lessee represents
and warrants to the Lessor and the Trustee as to itself, as to each other Lessee
and as to the Group III Vehicles leased by it hereunder (except that any Person
becoming a Lessee hereunder pursuant to Section 23 hereof does not represent and
warrant as to any Lessee that is not an Affiliate thereof), and the Guarantor
represents and warrants to the Lessor and the Trustee as to itself and as to
each Lessee, that as of the date hereof (or, with respect to each Group III
Series of Notes issued after the date hereof, the Closing Date with respect to
such Series of Notes):
28.1 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 termination or acceleration which does
not have a Material Adverse Effect on the Guarantor or such Lessee, as
-39-
45
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 (other than the Non-Budget
Lessees) is a direct or indirect Subsidiary of the Guarantor.
28.2 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, or shall be, furnished to the Lessor and
the Trustee on or prior to such Closing Date:
(a) the audited consolidated balance sheets of Budget and
each Non-Budget Lessee as of December 31, 1999 (or, if later, as of
December 31 of the most recently ended calendar year), and the related
statements of operations, stockholders' deficit and cash flows for the
fiscal year ending on such date; and
(b) (i) the unaudited pro forma consolidated balance
sheets of Budget and the Budget Subsidiaries and statement of
operations, accompanied by an Officers' Certificate verifying the
accuracy and completeness thereof signed by an Authorized Officer of
the Guarantor, for the most recently ended calendar quarter ending
March 31, June 30, September 30 or December 31, as applicable, and (ii)
the unaudited pro forma consolidated balance sheets of each Non-Budget
Lessee and statement of operations, accompanied by an Officers'
Certificate verifying the accuracy and completeness thereof signed by
an Authorized Officer of such Non-Budget Lessee, for the most recently
ended calendar quarter ending March 31, June 30, September 30 or
December 31, as applicable.
28.3 Litigation. Except for claims which are fully covered by
insurance provided by a Person who is not an Affiliate of Budget and for which
adequate reserves have been set aside in accordance with GAAP, 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.
28.4 Liens. The Group III Vehicles leased under this Agreement are
free and clear of all Liens other than (i) Permitted Liens and (ii) Liens in
favor of the Trustee. The Trustee has obtained, and will continue to obtain, as
security for the liabilities under the Indenture and the
-40-
46
Group III Series of Notes, a first priority perfected Lien on all Group III
Vehicles leased under this Agreement. Except as otherwise permitted under the
Indenture, all Vehicle Perfection and Documentation Requirements with respect to
all Group III Vehicles leased under this Agreement on or after the date hereof
have and will continue to be satisfied.
28.5 Employee Benefit Plans. (a) During the twelve consecutive
month period prior to the date hereof (or, with respect to each Series of Notes
included in the Group III Series of Notes after the date hereof, the Closing
Date with respect to such Series of Notes): (i) except for any termination of a
Pension Plan in connection with an acquisition or merger by the Guarantor, which
termination is made in conjunction with the offering by the Guarantor of a
successor Pension Plan, 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.
28.6 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.
28.7 Regulations G, T, 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, T, U and X of the Board of Governors
of the Federal Reserve System).
28.8 Business Locations; Trade Names; Principal Places of Business
Locations. Schedule 28.8 lists each of the locations where each Lessee and the
Guarantor maintains a chief executive office, principal place of business, or
its material books and records with respect to its obligations under this
Agreement; and Schedule 28.8 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.
28.9 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
-41-
47
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 with respect to each
Series of Notes included in Group III, 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.
28.10 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
authorizations would not have a Material Adverse Effect on the Guarantor or such
Lessee, as applicable.
28.11 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 Authority (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 he 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.
28.12 Eligible Vehicles. Each Group III Repurchase Vehicle is or
will be, as the case may be, on the Vehicle Lease Commencement Date with respect
to such Group III Repurchase Vehicle, an Eligible Repurchase Vehicle. Each Group
III Non-Repurchase Vehicle is or will be, as the case may be, on the Vehicle
Lease Commencement Date with respect to such Group III Non-Repurchase Vehicle,
an Eligible Non-Repurchase Vehicle.
28.13 Supplemental Documents True and Correct. All information
contained in any Group III Vehicle Order, Refinancing Schedule or other
Supplemental Document which has been submitted, or which may hereafter be
submitted by a Lessee to the Lessor is, or will be, true, correct and complete.
28.14 Accuracy of Information. All certificates, reports,
statements, documents and other written information furnished to the Lessor or
the Trustee by the Guarantor or any Lessee pursuant to any provision of any
Related Document, or in connection with or pursuant to any amendment or
modification of, or waiver under, any Related Document, shall, at the time the
-42-
48
same are so furnished, be complete and correct in all material respects to the
extent necessary to give the Lessor or the Trustee, as the case may be, true and
accurate knowledge of the subject matter thereof, and the furnishing of the same
to the Lessor or the Trustee, as the case may be, shall constitute a
representation and warranty by the Guarantor and such Lessee made on the date
the same are furnished to the Lessor or the Trustee, as the case may be, to the
effect specified herein.
Each of the foregoing representations and warranties will be deemed to
be remade as of the Closing Date with respect to each Group III Series of Notes.
29. CERTAIN AFFIRMATIVE COVENANTS. Each Lessee covenants and
agrees as to itself and as to each other Lessee (except that any Person becoming
a Lessee hereunder pursuant to Section 23 hereof does not covenant and agree as
to any Lessee that is not an Affiliate thereof), 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):
29.1 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 30.1(a) each Budget Subsidiary 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.
29.2 Books, Records and Inspections. (i) Maintain complete and
accurate books and records with respect to the Group III 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 Group III Vehicles leased under this Agreement including, without
limitation, with respect to Group III Repurchase Vehicles leased hereunder, in
connection with the Trustee's satisfaction of any requests of a Manufacturer
performing an audit under its Repurchase Program; and (iii) 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 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 Group III Vehicles
-43-
49
leased hereunder or the Guarantor's or such Lessee's performance under this
Agreement with any of the officers or employees of the Guarantor or such Lessee
having knowledge of such matters.
29.3 Insurance. The Guarantor, on behalf of each Budget Subsidiary,
and each Non-Budget Lessee, on its own behalf, subject to applicable state and
other requirements, may self-insure against personal injury and damage claims
arising from the use of the Group III Vehicles as well as damage to Group III
Vehicles. All self-insurance maintained by any member of the Lessee Group shall
be maintained in a financially prudent manner.
29.4 Repurchase Programs. With respect to each Group III Repurchase
Vehicle leased by each Lessee hereunder (a) unless previously purchased by such
Lessee pursuant to this Agreement or redesignated as a Group III Non-Repurchase
Vehicle pursuant to Section 14 hereof, turn in such Group III Repurchase Vehicle
to the relevant Manufacturer within the Repurchase Period therefor, (b) dispose
of such Group III Repurchase 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.
29.5 Reporting Requirements. Furnish, or cause to be furnished to
the Lessor (and the Lessor shall, in the case of clauses (i), (ii) and (iii)
below, forward a copy of the same to each Rating Agency as shall so request in
writing):
(i) Audit Report. (a) As soon as available and in any
event within 110 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 independent certified public accountants of
recognized national standing as shall be selected by the Guarantor; and
(b) as soon as available and in any event within one hundred ten days
after the end of each fiscal year of any Non-Budget Lessee, a copy of
the consolidated balance sheet of such Non-Budget Lessee 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 independent certified public accountants of
recognized national standing as shall be selected by such Non-Budget
Lessee.
(ii) Quarterly Statements. (a) 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 statements of earnings for such fiscal quarter) in each case
setting
-44-
50
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); and (b) as soon as available,
but in any event within 45 days after the end of each fiscal quarter
(except the fourth fiscal quarter) of any Non-Budget Lessee, copies of
the unaudited consolidated balance sheet of such Non-Budget Lessee 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 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 such Non-Budget Lessee as presenting fairly the financial
condition and results of operations of such Non-Budget Lessee and its
Subsidiaries (subject to normal year-end adjustments).
(iii) Amortization Events; 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 Amortization Event, 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 Group III Vehicles leased hereunder during the Related Month by
such Lessee, (ii) the Capitalized Cost for Group III Vehicles that are
Lessor-Owned Vehicles or Auction Acquired Vehicles, (iii) the Net Book
Value of Group III Repurchase Vehicles as of the end of the Related
Month, (iv) the Non-Repurchase Vehicle Value of Group III
Non-Repurchase Vehicles as of the end of the Related Month, (v) the
VINs for those Group III Vehicles that have been turned back to
Manufacturers pursuant to the applicable Repurchase Program during the
Related Month and the Repurchase Prices therefor and those Group III
Vehicles that have been delivered to a designated auction site pursuant
to the applicable Repurchase Program and the Guaranteed Payments
therefor, or that have been otherwise sold during the Related Month,
(vi) those Vehicles that have become Casualties during the Related
Month and their respective Casualty Payment amounts or Termination
Values, as applicable (as calculated immediately prior to the event
causing such Group III Vehicles to become Casualties), (vii) the amount
of Disposition
-45-
51
Proceeds in respect of Group III Vehicles sold during the Related
Month, (viii) the Repurchase Prices received during the Related Month
and any Guaranteed Payments received pursuant to a Repurchase Program
during the Related Month, (ix) the aggregate Depreciation Charges for
all Vehicles continuing in the possession of the Lessees, (x) the total
amount of Monthly Base Rent, Monthly Variable Rent, Additional Base
Rent, Monthly Supplemental Payments and Termination Payments being paid
hereunder on such date, (xi) information with respect to each Lessee
necessary for the Servicer to compute the Group III Aggregate
Non-Repurchase Asset Amount, the Group III Non-Repurchase Fleet Market
Value, the Group III Aggregate Asset Amount and the Group III Aggregate
Repurchase Asset Amount, each with respect to each Series of Notes
included in Group III as of the end of the Related Month, (xii) any
other charges owing from, and credits due to, the Lessee submitting
such Statement under this Agreement, (xiii) the percentages calculated
pursuant to Sections 2.5(a)(i) through (iii) as of the last day of the
Related Month, and (xiv) all prepayments of Rent received during the
Related Month from Guaranteed Payments, Repurchase Prices and
Disposition Proceeds received by the Lessor during the Related Month
from the Manufacturers, auctions and other Persons, as the case may be;
(v) Non-Repurchase Vehicle Report. Reports of independent
public accountants as follows: On or before the second Determination
Date immediately following March 31, June 30, September 30 and December
31, of each year, beginning with December 31, 1999, the Servicer shall
cause a firm of nationally recognized independent public accountants
(who may also render other services to the Servicer and which is
acceptable to the Rating Agencies, or, if no Rating Agency is then
currently requested to rate any Group III Series of Notes, to the
Majority Group III Noteholders) furnish a report (the "Non-Repurchase
Report") to the Lessor, the Trustee and the Rating Agencies (A) to the
effect that they have performed certain agreed upon procedures with
respect to (i) the calculation of Disposition Proceeds and Termination
Payments obtained from the sale or other disposition of all Group III
Non-Repurchase Vehicles (other than Casualties) sold or otherwise
disposed of during each Related Month in such period and compared such
calculations of Disposition Proceeds and Termination Payments with the
corresponding amounts set forth in the Daily Reports prepared by the
Servicer pursuant to Section 4.4(a) of the Base Indenture, (ii) the
calculation of the Measurement Month Average for each Measurement Month
in such period and compared such amounts with the corresponding amounts
set forth in the Monthly Servicer's Certificate prepared by the
Servicer pursuant to Section 4.4(b) of the Base Indenture and (iii) the
calculation of the Net Book Value of all Group III Non-Repurchase
Vehicles and the Non-Repurchase Fleet Market Value for the Related
Month and compared such amounts with the corresponding amounts set
forth in the Monthly Servicer's Certificate prepared by the Servicer,
or (B) in such other form as each Rating Agency shall have expressly
agreed to accept;
(vi) Monthly Notice of Claims. Monthly, provide to the
Lessor and Moody's (so long as ▇▇▇▇▇'▇ is then currently requested to
rate any of the Group III Series of Notes),
-46-
52
a report of any lawsuits filed against the Lessor naming the Lessor as
defendant in such action;
(vii) Notice of Final Judgment. Promptly, provide to the
Lessor and Moody's (so long as ▇▇▇▇▇'▇ is then currently requested to
rate any of the Group III Series of Notes), notice of any final
judgment rendered against the Lessor; and
(viii) Other. Promptly, from time to time, such other
information, documents, or reports respecting the Group III Vehicles
leased under this Agreement or the condition or operations, 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.
29.6 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 Group III 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 Group III 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.
29.7 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.
29.8 Maintenance of Separate Existence. The Guarantor and each
Lessee acknowledges its receipt of a copy of that certain opinion letter issued
by ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, dated June 29, 2000, 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.
29.9 Trustee as Lienholder. Concurrently with each leasing of a
Group III 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 Group III Vehicle pursuant to the terms of the Base Indenture.
29.10 Maintenance of Credit Enhancement. The Guarantor agrees to
maintain a letter of credit in a stated amount which is equal to or greater than
the Required Letter of Credit Amount.
30. 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,
-47-
53
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):
30.1 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 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 or any Subsidiary into or with another
entity if:
(a) the corporation formed by such consolidation or into
or with which the Guarantor or such Subsidiary 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 or such Subsidiary 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 or such Subsidiary hereunder and under all
other Related Documents;
(b) the Guarantor or such Subsidiary 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 30.1 and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(c) Rating Agency Confirmation shall have been obtained
with respect to such assignment and succession.
30.2 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.
30.3 Liens. Create or permit to exist any Lien with respect to any
Group III 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 Base 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
-48-
54
compensation, unemployment insurance or other forms of governmental insurance or
benefits, and (iv) mechanics', materialmen's, landlords', warehousemen's and
carriers' Liens, 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.
30.4 Use of Vehicles. Knowingly use or allow the Group III
Vehicles to be used in any manner that would (i) make any Group III Repurchase
Vehicle ineligible for repurchase, or for the guarantee by the related
Manufacturer of the resale price thereof, under an Eligible Repurchase Program
(subject to the provisions of Section 19 regarding Eligibility Waiver Events),
except with respect to the permitted redesignation of Group III Repurchase
Vehicles as, respectively, Group III Non-Repurchase Vehicles pursuant to Section
13A hereof, or (ii) subject Group III Vehicles to confiscation.
30.5 Restrictions on Distributions. Following the Lease
Commencement Date, Budget will not, and will not permit any of its Subsidiaries
to declare, pay or make any Distribution (as defined in the Credit Agreement)
such as is consistent with and not in contravention of Section 8.2.6 of the
Credit Agreement.
31. 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 Group III 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 31, 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 31 shall survive the termination of this Agreement.
32. 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
-49-
55
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 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.
33. 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.
34. 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.
35. 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 Schedule II, 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 Budget, 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 the Lessor pursuant to the foregoing sentence shall be sent to the
following addresses:
-50-
56
TRUSTEE: Bankers Trust Company
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust and Agency
Group/Structured Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
LESSOR: Team Fleet Financing Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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.
36. 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.
37. 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.
38. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
39. 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.
40. EFFECTIVENESS. This Agreement shall become effective
concurrently with the issuance of the Series 2000-2 Note as the first Group III
Series of Notes.
-51-
57
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: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
LESSEES:
BUDGET RENT-A-CAR SYSTEMS, INC.
NYRAC, INC.
PREMIER CAR RENTAL LLC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
GUARANTOR:
BUDGET GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
RECEIVED THIS June ______, 2000
BANKERS TRUST COMPANY, as
Trustee
By:
-----------------------------
Name:
Title:
58
ANNEX A
ANNEX
TO THE
MASTER MOTOR VEHICLE LEASE AGREEMENT GROUP III
Dated as of June 29, 2000
among
TEAM FLEET FINANCING CORPORATION,
as Lessor
BUDGET GROUP, INC.,
as Guarantor
and
BUDGET RENT A CAR SYSTEMS, INC.
and those Subsidiaries, Affiliates and Non-Affiliates of Budget Group, Inc.
named on Schedule 1 as Lessees
59
1. Scope of Annex. This Annex A shall apply only to the
acquisition, leasing and servicing of the Lessor-Owned Vehicles by the Lessor
pursuant to the Agreement, as supplemented by this Lease Annex (collectively,
the "Operating Lease").
2. General Agreement. With respect to the Lessor-Owned Vehicles,
the Lessees and the Lessor intend that the Agreement, as supplemented by this
Lease Annex, is an operating lease and that the relationship between the Lessor
and the Lessees pursuant thereto and hereto shall always be only that of lessor
and lessees, and the Lessees hereby declare, acknowledge and agree that the
Lessor has title to and is the owner of the Lessor-Owned Vehicles. The Lessees
shall not acquire by virtue of the Lease any right, equity, title or interest in
or to any Lessor-Owned Vehicles, except the right to use the same under the
terms of the Operating Lease. The parties agree that the Operating Lease is a
"true lease" for all legal, accounting, tax and other purposes and agree to
treat the Operating Lease, as it applies to the Lessor-Owned Vehicles, as an
operating lease for all purposes, including tax, accounting and otherwise. The
parties will file all federal, state and local tax returns and reports in a
manner consistent with the preceding sentence.
3. Operating Lease Commitment. (1) The Lessor shall, from time to
time on or after the Lease Commencement Date and prior to the Lease Expiration
Date, subject to the terms and conditions of the Agreement, refinance
Lessor-Owned Vehicles that are Refinanced Vehicles and purchase Lessor-Owned
Vehicles identified in Group III Vehicle Orders placed by a Lessee for a
purchase price equal to the Capitalized Cost thereof, and simultaneously
therewith, the Lessor shall under the Operating Lease enter into operating
leases with the related Lessee with respect to such Group III Vehicles;
provided, that the aggregate Net Book Value of Lessor-Owned Vehicles leased
hereunder on any date shall not exceed (a) the Maximum Lease Commitment, less
(b) the Base Amount as of such date with respect to the Financing Lease.
4. Reserved.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of
the Operating Lease as it relates to each Lessor-Owned Vehicle leased hereunder
shall be from the Vehicle Lease Commencement Date to the date that is 24 months
from the Vehicle Lease Commencement Date; provided that notwithstanding the
period stated above, the maximum Vehicle lease term for any Vehicle or type of
Vehicle may be such longer period with respect to which Rating Agency
Confirmation has been obtained. On the occurrence of such date for a Group III
Vehicle not previously disposed of, the applicable Lessee shall, (a) on behalf
of the Lessor, promptly dispose of such Group III Vehicle in accordance with the
terms hereof and in accordance with any instructions of the Lessor for such
disposition, (b) in each case, provide that Disposition Proceeds be paid
directly to the Collection Account for the benefit of the Group III Noteholders
and (c) pay to the Trustee, in accordance with this Operating Lease, any other
amounts unpaid and owing from such Lessee under the Lease in respect of such
Vehicle.
6. Lessees's Rights to Purchase Vehicles. The related Lessee will
have the option, exercisable during the Vehicle Term with respect to any
Lessor-Owned Vehicle leased hereunder, to purchase any Lessor-Owned Vehicles
leased under this Agreement at a purchase price equal to the greater of (a) the
Annex A
-1-
60
applicable Net Book Value or (b) the Fair Market Value of the Group III Vehicle
(such greater amount, the "Vehicle Purchase Price", with respect to Group III
Repurchase Vehicles, and the "Non-Repurchase Vehicle Value", with respect to
Group III Non-Repurchase Vehicles), in which event such Lessee will pay the
Vehicle Purchase Price or the Non-Repurchase Vehicle Value, as applicable, to
the Lessor on or before the Due Date next succeeding such purchase by the Lessee
plus all accrued and unpaid Monthly Base Rent and Monthly Variable Rent with
respect to such Vehicle through the date of such purchase. In addition, each
Lessee will have the option, exercisable with respect to any Manufacturer
Receivable related to a Lessor-Owned Vehicle which was leased by such Lessee
under this Agreement, to purchase such Manufacturer Receivable for a price equal
to the amount due from the Manufacturer under such Manufacturer Receivable, in
which event the Lessee will pay such amount to the Trustee on or before the
Distribution Date next succeeding such purchase by the Lessee. Upon receipt of
such purchase price by the Trustee, the Lessor, at the request of the Lessee,
shall cause title to any such Group III Vehicle or Manufacturer Receivable, as
applicable, to be transferred to the applicable Lessee, and the Lien of the
Trustee on such Group III Vehicle shall be released thereby.
7. Vehicle Disposition. The Lessees agree that, with respect to
Lessor-Owned Vehicles, each Lessee shall use its commercially reasonable efforts
to return each Group III Repurchase Vehicle (other than any such Group III
Repurchase Vehicle that has been redesignated as a Group III Non-Repurchase
Vehicle pursuant to Section 14 of the Lease) to the related Manufacturer (a) not
prior to the end of the Minimum Term for such Vehicle, and (b) not later than
the end of the Maximum Term for such Vehicle; provided, however, if for any
reason, a Lessee fails to deliver such a Group III Repurchase Vehicle to the
applicable Manufacturer for repurchase by the Manufacturer in accordance with
the applicable Repurchase Program, 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 Group III Repurchase Vehicle as provided in Section
12 of the Agreement or redesignate such Group III Vehicle as a Group III
Non-Repurchase Vehicle in accordance with Section 14 of the Lease. Each Lessee
shall, with respect to Lessor-Owned Vehicles leased by it hereunder, pay the
equivalent of the Rent for the Minimum Term for Group III Repurchase Vehicles
returned before the expiration of the Minimum Term, regardless of actual usage,
unless such a Group III Repurchase Vehicle is a Casualty, which will be handled
in accordance with Section 6 of the Agreement. All Disposition Proceeds due from
the disposition of Group III Repurchase Vehicles pursuant to this Section shall
be due and payable to the Lessor. The Lessor and the Lessees agree, with respect
to Lessor-Owned Vehicles, that the Lessees shall use commercially reasonable
efforts to dispose of each Group III Non-Repurchase Vehicle (a) in a
commercially reasonable manner, consistent with industry practice and applicable
requirements of law, and that is most likely to maximize proceeds from such
disposition and (b) prior to the expiration of the Non-Repurchase Maximum Term
for such Group III Non-Repurchase Vehicle. Each Lessee shall use commercially
reasonable efforts to cause all proceeds from the disposition of Group III
Vehicles pursuant to this Section to be paid directly to the Collection Account;
provided that, to the extent that any Lessee receives any such proceeds
directly, it shall deliver such proceeds to the Trustee within five (5) days of
receipt thereof for deposit into the Collection Account.
8. Lessor's Right to Cause Vehicles to be Sold. Notwithstanding
anything to the contrary contained in the Agreement, the Lessor shall have the
right, at any time after the date forty-five (45) days
Annex A
-2-
61
prior to the expiration of the Maximum Term or Non-Repurchase Maximum Term, as
applicable, for any Group III Vehicle leased under this Annex A, to require that
the Lessee thereof, and the Lessee shall have the obligation to (a) deliver such
Group III Vehicle to the Manufacturer for repurchase (if such Group III Vehicle
is a Group III Repurchase Vehicle) or (b) exercise commercially reasonable
efforts to arrange for the sale of such Vehicle to a third party for a price (i)
greater than the Net Book Value thereof (if such Group III Vehicle is a Group
III Repurchase Vehicle) or (ii) at least equal to the Non-Repurchase Vehicle
Value thereof (if such Group III Vehicle is a Group III Non-Repurchase Vehicle).
If a sale of the Vehicle to a third party is arranged by the Lessee prior to the
expiration of such Maximum Term in accordance with the foregoing, then the
Lessee shall deliver the Group III Vehicle to the purchaser thereof, the Lien of
the Trustee on the Certificate of Title of such Group III 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 a Group III Repurchase Vehicle on or before the 30th day prior to the
expiration of such Maximum Term, then the Lessee shall cease attempting to
arrange for such a sale and shall return such Group III Repurchase Vehicle to
the applicable Manufacturer or purchase such Group III Vehicle as herein
provided. If the Lessee is unable to arrange for a sale of a Group III
Non-Repurchase Vehicle for an amount in excess of the Non-Repurchase Vehicle
Value thereof prior to the end of the applicable Non-Repurchase Maximum Term,
then the Lessee shall cease attempting to arrange for such sale and shall
arrange for the sale of such Group III Vehicle at auction with commercially
reasonable efforts to maximize the sale price. In no event may any Group III
Repurchase Vehicle be sold pursuant to this paragraph 8 (other than pursuant to
a Repurchase Program) unless the funds to be paid to the Lessor arising out of
such sale exceed the Net Book Value of such Group III Vehicle less reasonably
predictable Excess Mileage Charges, Excess Damage Charges and other similar
charges imposed by the Manufacturer.
9. Calculation of Rent. Rent shall be due and payable on a
monthly basis as set forth in this paragraph 9:
(a) Certain Definitions. As used herein the following
terms have the following meanings:
"Additional Base Rent" with respect to the Group III
Non-Repurchase Vehicles leased hereunder, with respect to each
Due Date shall equal the amount, if any, by which (a) 100% of
the aggregate Net Book Value of such Group III Non-Repurchase
Vehicles owned by the Lessor exceeds (b) the three (3) month
rolling average of the Fair Market Value of such Group III
Non-Repurchase Vehicles for the preceding three (3) calendar
months.
"Monthly Base Rent" with respect to each Due Date and
each Lessor-Owned Vehicle leased under this Agreement during
the Related Month shall be the sum of all Depreciation Charges
that have accrued with respect to such Group III Vehicle
during the Related Month.
"Monthly Variable Rent" with respect to each Due Date
and each Lessor-Owned Vehicle leased under this Agreement on
any day during the Related Month shall equal the
Annex A
-3-
62
sum of (a) an amount equal to the Net Book Value of such Group
III Vehicle, with respect to each Group III Repurchase
Vehicle, or the Non-Repurchase Vehicle Value of such Vehicle,
with respect to each Group III Non-Repurchase 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) the sum of
all Carrying Charges for each Group III Series of Notes for
the Related Month less (y) any accrued earnings on Permitted
Investments in the Group III Collection Account which are
accrued through the last Business Day of the Related Month and
maturing by the next Distribution Date and (ii) a fraction,
the numerator of which is the Net Book Value of such Group III
Vehicle, with respect to each Group III Repurchase Vehicle, or
the Non-Repurchase Vehicle Value of such Vehicle, with respect
to each Group III Non-Repurchase Vehicle, and the denominator
of which is the sum of the Net Book Values and Non-Repurchase
Vehicle Values of all Group III Vehicles. In the event the
Vehicle Lease Commencement Date occurs with respect to such
Group III Vehicle on a day other than the last day of a
Related Month, the Monthly Variable Rent for such Group III
Vehicle shall be equal to the product of (a) the Monthly
Variable Rent otherwise payable with respect to such Group III
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 on a day other than the last day of the 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 Group III 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", with respect to Lessor-Owned Vehicles, means
Monthly Base Rent, Monthly Variable Rent and Additional Base
Rent.
"VFR" for any period with respect to any Group III
Series of Notes, is an interest rate equal to (i) the amount
of interest accrued during such period with respect to all
Group III Series of Notes divided by (ii) the average daily
Invested Amounts of all such Group III Series of Notes during
such period.
(b) Payment of Rent. On each Due Date:
(i) 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 Group III Vehicle leased
hereunder by such Lessee;
Annex A
-4-
63
(ii) 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 Group III
Vehicle leased hereunder by such Lessee; and
(iii) Additional Base Rent. Each Lessee shall pay
to the Lessor such Lessee's Share of an amount equal to the
monthly Additional Base Rent that has accrued during the
Related Month with respect to the Group III Non-Repurchase
Vehicles leased hereunder by such Lessee.
10. Net Lease. THE OPERATING LEASE SHALL BE A NET LEASE, AND THE
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 the Lessees 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 Group III Vehicles pursuant to Section 2.2 of the Agreement)
for any reason, including without limitation: (i) any defect in the condition,
merchantability, quality or fitness for use of the Group III Vehicles or any
part thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping
or destruction of or any requisition or taking of the Group III Vehicles or any
part thereof; (iii) any restriction, prevention or curtailment of or
interference with any use of the Group III Vehicles or any part thereof; (iv)
any defect in or any Lien on title to the Group III 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 the Operating Lease 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 the Operating Lease 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 Group III 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. The Operating
Lease 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 the
Operating Lease, or to any diminution or reduction of Rent payable by such
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, no Lessee shall seek to recover any
such payment or any part thereof for any reason whatsoever, absent manifest
error. If for any reason whatsoever the Operating Lease 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 the Operating Lease as if it had not been terminated
in whole
Annex A
-5-
64
or in part. All covenants and agreements of each Lessees herein shall be
performed at its cost, expense and risk unless expressly otherwise stated.
11. Liens. Except for Permitted Liens, each Lessee shall keep all
Group III Vehicles leased by it free of all Liens arising during the Term. Upon
the Vehicle Lease Termination Date for each Group III 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 interests in the Group III
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 Base Indenture and the Related Documents does not interfere with the
rights of such Lessee under this Agreement.
12. Non-Disturbance. So long as a Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Group III Vehicles
leased by it hereunder will not be disturbed during the Term subject, however,
to paragraph 8 of this Annex A to the Lease and except that the Lessor and the
Trustee each retains the right, but not the duty, to inspect the Group III
Vehicles without disturbing the ordinary conduct of the Lessees'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 Group III Vehicle leased by it hereunder and to
make available for the Lessor's or the Trustee's inspection within a reasonable
time period, not to exceed forty-five (45) days, such Group III Vehicles at the
location where such Group III Vehicles are normally domiciled. Further, each
Lessee will, during normal business hours and with a notice of three (3)
Business Days, make its records pertaining to the Group III Vehicles available
to the Lessor or the Trustee for inspection at the location where the Lessees's
records are normally domiciled.
13. Certain Risks of Loss Borne by Lessees. Upon delivery of a
Group III Vehicle to a Lessee, as between the Lessor and the Lessees, such
Lessee assumes and bears the risk of loss, damage, theft, taking, destruction,
attachment, seizure, confiscation or requisition and all other risks and
liabilities with respect to such Group III Vehicle, including personal injury or
death and property damage, arising with respect to such Group III Vehicle due to
the manufacture, purchase, acceptance, rejection, delivery, leasing, subleasing,
possession, use, inspection, registration, operation, condition, maintenance,
repair or storage of such Group III Vehicle, howsoever arising.
Annex A
-6-
65
14. Title. This is an agreement to lease only, and title to the
Lessor-Owned Vehicles will at all times remain in the Lessor's name. The Lessees
will not have any rights or interest in such Group III Vehicles whatsoever other
than the rights of possession and use of such Group III Vehicles as provided by
this Agreement. In addition, 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 as they relate to the
Lessor-Owned Vehicles leased hereunder and (ii) the Lessee has no right, title
or interest in any Repurchase Program as it relates to any Lessor-Owned Vehicle
leased hereunder. To confirm the foregoing, each Lessees, by its execution
hereof, hereby assigns and transfers to the Lessor any rights that such Lessee
may have in respect of any Repurchase Programs as they relate to the
Lessor-Owned Vehicles leased by it hereunder.
* * *
Annex A
-7-
66
ANNEX B
ANNEX
TO THE
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP III
Dated as of June 29, 2000
among
TEAM FLEET FINANCING CORPORATION,
as Lessor
BUDGET GROUP, INC.,
as Guarantor
and
BUDGET RENT A CAR SYSTEMS, INC.
and those Subsidiaries, Affiliates and Non-Affiliates of Budget Group, Inc.
named on Schedule 1 as Lessees
67
1. Scope of Annex. This Annex B shall apply only to the
acquisition or financing, leasing and servicing of the Financed Vehicles by the
Lessor pursuant to the Agreement, as supplemented by this Lease Annex
(collectively, the "Financing Lease").
2. General Agreement. With respect to the Financed Vehicles, the
Lessees and the Lessor each intend that the Agreement, as supplemented by this
Lease Annex, constitute a financing arrangement and that the relationship
between the Lessor and the Lessees pursuant thereto and hereto shall always be
only that of lessor and lessee, and the Lessor hereby declares, acknowledges and
agrees that the ownership of each Financed Vehicle leased hereunder rests solely
with the Lessee thereof subject to the security interest granted hereunder to
the Lessor.
3. Financing Lease Commitment. Subject to the terms and
conditions of the Financing Lease, upon execution and delivery of the Financing
Lease, the Lessor shall (i) on or after the Lease Commencement Date and prior to
the Lease Expiration Date purchase, finance or refinance Financed Vehicles and
other Refinanced Vehicles identified in Refinancing Schedules for a purchase
price equal to the aggregate Net Book Value thereof, and (ii) from time to time
on or after the Lease Commencement Date and prior to the Lease Expiration Date
purchase all other Financed Vehicles identified in Group III Vehicle Orders
placed by the Lessees for a purchase price equal to the Capitalized Cost
thereof, and in each case simultaneously therewith enter into this Financing
Lease with the Lessees with respect to the Financed Vehicles, as the case may
be; provided, that the aggregate outstanding Base Amount of the Financing Lease
shall not on any date exceed (a) the Maximum Lease Commitment, less (b) the sum
of (x) the sum of the Net Book Values of Lessor-Owned Vehicles leased under the
Operating Lease on such date, each such Net Book Value calculated as of the
first day contained within both the calendar month in which such date of
determination occurs and the Vehicle Term for the related Lessor-Owned Vehicle,
plus (y) accrued and unpaid Monthly Base Rent under the Operating Lease as of
such date.
4. Reserved.
5. Maximum Vehicle Lease Term. The maximum vehicle lease term of
the Financing Lease as it relates to each Financed Vehicle leased hereunder
shall be from the Vehicle Lease Commencement Date to the date that is 60 months
from the Vehicle Lease Commencement Date. On the occurrence of such date, each
Lessee shall pay to the Lessor, in accordance with this Financing Lease, any
amounts unpaid and owing under the Lease in respect of such Group III Vehicle.
6. Calculation of Rent and Monthly Supplemental Payment. Rent and
the Monthly Supplemental Payment shall be due and payable on a monthly basis as
set forth in this Paragraph 6:
(a) Certain Definitions. As used herein the following
terms have the following meanings:
Annex B
-1-
68
"Additional Base Rent" with respect to the Group III
Non-Repurchase Vehicles leased hereunder, with respect to each
Due Date shall equal the amount, if any, by which (a) 100% of
the aggregate Net Book Value of such Group III Non-Repurchase
Vehicles owned by the Lessor exceeds (b) the three (3) month
rolling average of the Fair Market Value of such Group III
Non-Repurchase Vehicles for the preceding three (3) calendar
months.
"Monthly Base Rent" with respect to each Due Date and
each Financed Vehicle leased under this Agreement on any day
during the Related Month shall be the sum of all Depreciation
Charges that have accrued with respect to such Group III
Vehicle during the Related Month.
"Monthly Finance Rent" with respect to each Due Date
and each Group III Vehicle subject to this Agreement shall
equal the sum of (a) an amount equal to the Net Book Value of
such Group III Vehicle, with respect to each Group III
Repurchase Vehicle, or the Non-Repurchase Vehicle Value of
such Group III Vehicle, with respect to each Group III
Non-Repurchase 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) the sum of all Carrying Charges for
each Group III Series of Notes for the Related Month less (y)
any accrued earnings on Permitted Investments in the Group III
Collection Account which are accrued through the last Business
Day of the Related Month and maturing by the next Distribution
Date and (ii) a fraction, the numerator of which is the Net
Book Value of such Group III Vehicle, with respect to each
Group III Repurchase Vehicle, or the Group III Non-Repurchase
Vehicle Value of such Group III Vehicle, with respect to each
Group III Non-Repurchase Vehicle, and the denominator of which
is the sum of the Net Book Values and Non-Repurchase Vehicle
Values of all Group III Vehicles. In the event the Vehicle
Lease Commencement Date occurs with respect to such Group III
Vehicle on a day other than the last day of a Related Month,
the Monthly Finance Rent for such Group III Vehicle shall be
equal to the product of (a) the Monthly Finance Rent otherwise
payable with respect to such Group III 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 Group III Vehicle
on a day other than the last day of the Related Month, the
Monthly Finance Rent for such Group III Vehicle shall be equal
to the product of (a) the Monthly Finance Rent otherwise
payable with respect to such Group III 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.
Annex B
-2-
69
"Monthly Supplemental Payment" with respect to each
Due Date and all Group III Vehicles that were leased under
this Financing Lease on any day during the Related Month shall
be an amount equal to the sum of (i) the aggregate Termination
Values (each as of the date on which such Financed Vehicle is
no longer an Eligible Vehicle, becomes a Casualty or is sold,
as applicable) of all the Financed Vehicles financed under
this Finance Lease at any time during such Related Month that,
without double counting, while so financed are no longer
Eligible Repurchase Vehicles or Eligible Non-Repurchase
Vehicles, have suffered a Casualty or are sold by the Lessee
(it being understood that the Lessee has agreed to sell
Financed Vehicles only in a manner consistent with the
provisions hereof and of the Related Documents) to any Person
(including the Lessee) 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, in each case, during the Related Month,
plus (ii) the aggregate Termination Values (each as of the
applicable Disposition Date) of all the Financed Vehicles
financed under this Finance Lease that while so financed were
returned by the Lessee to a Manufacturer or designated auction
pursuant to a Repurchase Program with respect to which either
(x) the Repurchase Price or the Guaranteed Payment and
Disposition Proceeds have been paid by such Manufacturer
and/or the related auction dealers during the Related Month or
(y) a Manufacturer Event of Default has occurred, or (z) the
90th day after the Turnback Date with respect thereto has
occurred during the Related Month and the Repurchase Price or
Guaranteed Payment has not been received, plus (iii) the
aggregate face amount of all the Manufacturer Receivables
financed under this Finance Lease with respect to which either
(x) the Repurchase Price or the Guaranteed Payment and
Disposition Proceeds have been paid by such Manufacturer
and/or the related auction dealers during the Related Month or
(y) a Manufacturer Event of Default has occurred or (z) the
90th day after the Turnback Date with respect thereto has
occurred during the Related Month and the amount of such
Manufacturer Receivables has not been received, plus (iv) the
aggregate amount of all Auction Receivables financed under
this Finance Lease with respect to which (x) the amount
thereof has been paid by the related Auction Dealer or (y) the
10th day after the sale of the related Vehicle at auction has
occurred during the Related Month and the amount of the
related Auction Receivable has not been received, minus (iv)
any amounts received by the Lessor or the Trustee, or
deposited into the Collection Account, during the Related
Month representing (a) Repurchase Prices and Guaranteed
Payments for repurchases or dispositions of Financed Vehicles
or (b) the sales proceeds for sales of Financed Vehicles
financed at the time of such sale under this Finance Lease to
a third party other than to a Manufacturer. Solely for
determining the amounts payable hereunder with respect to a
Financed Vehicle that is a Group III Repurchase Vehicle that
became a Casualty as a result of such Group III Repurchase
Vehicle being held beyond the Maximum Term applicable thereto
(other than, in each case, a Group III Repurchase Vehicle that
has been redesignated as a Group III Non-Repurchase Vehicle in
accordance with Section 14 of the Lease), such Group III
Vehicle will be deemed to have become a Casualty upon the date
the Maximum Term expires.
Annex B
-3-
70
"Rent", with respect to Financed Vehicles, means
Monthly Base Rent, Monthly Finance Rent, Monthly Supplemental
Rent, Monthly Supplemental Payments and Additional Base Rent.
"VFR" for any period with respect to any Group III
Series of Notes, is an interest rate equal to (i) the amount
of interest accrued during such period with respect to all
Group III Series of Notes divided by (ii) the average daily
Invested Amounts of all such Group III Series of Notes during
such period.
(b) Payment of Rent. On each Due Date:
(i) 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 Group III Vehicle leased
hereunder by such Lessee;
(ii) Monthly Finance Rent. Each Lessee shall pay
to the Lessor all Monthly Finance Rent that has accrued during
the Related Month with respect to each Group III Vehicle
leased hereunder by such Lessee;
(iii) Additional Base Rent. Each Lessee shall pay
to the Lessor such Lessee's Pro Rata Share of an amount equal
to the monthly Additional Base Rent that has accrued during
the Related Month with respect to the Group III Non-Repurchase
Vehicles leased hereunder by such Lessee; and
(iv) Monthly Supplemental Payments. Each Lessee
shall pay to the Lessor the Monthly Supplemental Payments that
have accrued during the Related Month with respect to all
Group III Vehicles that were leased under the Finance Lease on
any day during the Related Month; provided, however, that in
the event that the Monthly Supplemental Payment accrued during
a Related Month is a negative dollar amount, such amount may
be netted against other payments to be paid on such Due Date
pursuant to this Paragraph 6.
(c) On the expiration of the Term of the Lease, any
remaining Base Amount, plus all other amounts payable by the Lessees
under the Financing Lease shall be immediately due and payable.
(d) A Lessee may from time to time prepay the Base Amount
of the Financing Lease with respect to a Financed Vehicle leased by it
hereunder, in whole or in part, on any date, provided that such Lessee
shall give the Lessor and the Trustee not less than one (1) Business
Day's prior notice of any prepayment, specifying the date and amount of
such prepayment, and the Financed Vehicles to which such prepayment
relates.
Annex B
-4-
71
7. Risk of Loss Borne by Lessees. Upon delivery of each Financed
Vehicle to the Lessee thereof, as between the Lessor and the Lessee thereof, the
Lessee assumes and bears the risk of loss, damage, theft, taking, destruction,
attachment, seizure, confiscation or requisition with respect to such Group III
Vehicle, however caused or occasioned, and all other risks and liabilities,
including personal injury or death and property damage, arising with respect to
such Group III 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 Group III Vehicle, howsoever arising.
8. Mandatory Repurchase of Texas Vehicles and Hawaii Vehicles.
Prior to the Vehicle Lease Expiration Date with respect to each Texas Vehicle or
Hawaii Vehicle (other than a Vehicle Lease Expiration Date arising in connection
with the purchase of such Group III Vehicle pursuant to this Paragraph 8) and,
prior to the expiration of the Maximum Term or Non-Repurchase Maximum Term
applicable thereto, the Lessee thereof shall purchase such Texas Vehicle or
Hawaii Vehicle (including any such Group III Vehicle which has become a
Casualty) at a purchase price equal to the Net Book Value of such Group III
Vehicle calculated as of the date of purchase (or, in the case of a Casualty, at
a purchase price equal to the Monthly Supplemental Payments accruing in respect
of such Casualty during the Related Month in which such Group III Vehicle became
a Casualty), which shall be payable to the Trustee (together with all accrued
and unpaid Rent and other payments due and payable on such Due Date with respect
to such Texas Vehicle or Hawaii Vehicle through the date of such purchase) on or
prior to the Due Date next succeeding such purchase by the Lessee. The Lessor
shall cause title to each Texas Vehicle or Hawaii Vehicle to be transferred to
the Lessee thereof, and the Servicer shall cause the Trustee to cause its Lien
to be removed from the Certificate of Title for such Group III Vehicle,
concurrently with or promptly after such purchase price for such Texas Vehicle
or Hawaii Vehicle, as applicable, (and any such unpaid Rent and payments) is
paid by the Lessee to the Trustee. Notwithstanding anything to the contrary in
this Agreement, no Texas Vehicle or Hawaii Vehicle may be sold or otherwise
disposed of (other than pursuant to Section 17.3 of the Agreement), including by
return to its Manufacturer pursuant to a Repurchase Program, prior to its
purchase by the Lessee thereof pursuant to and in accordance with this Paragraph
8.
9. Lessee's Rights to Purchase Manufacturer Receivables. In
addition, each Lessee will have the option, exercisable with respect to any
Manufacturer Receivable related to a Financed Vehicle which was leased by such
Lessee under this Agreement, to purchase such Manufacturer Receivable for a
price equal to the amount due from the Manufacturer under such Manufacturer
Receivable, in which event the Lessee will pay such amount to the Trustee on or
before the Payment Date next succeeding such purchase by the Lessee. Upon
receipt of such funds by the Trustee, the Lessor, at the request of the Lessee,
shall cause title to any such Manufacturer Receivable to be transferred to the
Lessee, and the Lien of the Trustee in such Manufacturer Receivable will
automatically be released concurrently with or promptly after the purchase price
for such Manufacturer Receivable (and any unpaid Monthly Base Rent, unpaid
Monthly Variable Rent and other unpaid charges, payments and amounts) is paid by
the Lessee to the Trustee.
* * *
Annex B
-5-
72
Schedule I
LESSEES AS OF SERIES 2000-2 CLOSING DATE
1. BUDGET RENT-A-CAR SYSTEMS, INC.
2. NYRAC, INC.
3. PREMIER CAR RENTAL LLC
73
Schedule II
NOTICE ADDRESSES
BUDGET RENT-A-CAR SYSTEMS, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
NYRAC, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
PREMIER CAR RENTAL LLC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
74
Schedule 28.8
BUSINESS LOCATIONS
BUDGET RENT-A-CAR SYSTEMS, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
NYRAC, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
PREMIER CAR RENTAL LLC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
75
ATTACHMENT A-1
TO
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP III
SCHEDULE OF INITIAL FLEET
Information on Refinanced Vehicles (including Initial Fleet)
and Eligible Receivables
Refinanced Vehicles (including Initial Fleet)
1 Vehicle Model
2 Vehicle Identification Number (last eight digits) (VIN)
3 Vehicle Lease Commencement Date
4 Capitalized Cost
5 Monthly Base Rent
6 Garaging State
7 Lienholder
8 Amount to pay off existing indebtedness
Eligible Receivables
1 identity of obligor
2 amount of receivable
3 date of origination of receivable
4 vehicle identification number (VIN) of vehicles to which
receivable relates (grouped by obligor)
76
ATTACHMENT A-2
TO
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP III
GROUP III VEHICLE ACQUISITION SCHEDULE
Vehicle Order
1 Vehicle Model
2 Vehicle Identification Number (last eight digits) (VIN)
3 Vehicle Lease Commencement Date
4 Capitalized Cost
5 Monthly Base Rent
6 Garaging State
77
ATTACHMENT B
TO
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP III
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
correction of any such certificate 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 [Secretary] this _____ day of
__________, 20__.
TEAM FLEET FINANCING CORPORATION
By:
---------------------------------------
Name:
Title:
78
State of _____________________________ )
)
County of ____________________________ )
Subscribed and sworn before me, a notary public, in and for said county
and state, this __________ day of __________, 20___.
-------------------------------------------
Notary Public
My Commission Expires:
--------------------
B-2
79
ATTACHMENT C
TO
MASTER MOTOR VEHICLE LEASE AGREEMENT
Group III
FORM OF JOINDER IN LEASE
THIS JOINDER IN LEASE AGREEMENT (this "Joinder") is executed as of
_______________ ___, 20___, by _______________, a _____________________________
("Joining Party"), and delivered to Team Fleet Financing Corporation, a Delaware
corporation ("TFFC"), as lessor pursuant to the Master Motor Vehicle Lease
Agreement-Group III, dated as of June 29, 2000 (as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof, the
"Lease"), among TFFC, Budget Systems, Inc. and those direct or indirect
Subsidiaries and other Affiliates of Budget Group, Inc. ("Budget"), a Delaware
corporation formerly known as Team Rental Group, Inc., that are listed on
Schedule 1 to the Lease and those that become party to the Lease pursuant to the
provisions of Section 23 thereof and those additional parties that are not
direct or indirect Subsidiaries or other Affiliates of Budget that become
parties to the Lease pursuant to the provisions of Section 23 thereof
(individually, a "Lessee" and, collectively, the "Lessees"), and Budget, as
guarantor. Capitalized terms used herein but not defined herein shall have the
meanings provided for in the Lease.
R E C I T A L S:
[WHEREAS, the Joining Party is a direct or indirect Subsidiary or other
Affiliate of Budget; and]
WHEREAS, the Joining Party desires to become a "Lessee" under and
pursuant to the Lease.
NOW, THEREFORE, the Joining Party agrees as follows:
80
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 or Affiliate of Budget, (ii)] all of the conditions required
to be satisfied pursuant to Section 23 of the Lease in respect of the Joining
Party becoming a Lessee thereunder have been satisfied, and (iii) all of the
representations and warranties contained in Section 28 of the Lease with respect
to the Lessees are true and correct as applied to the Joining Party as of the
date hereof.
2. The Joining Party hereby agrees to assume all of the
obligations of a "Lessee" under the Lease and agrees to be bound by all of the
terms, covenants and conditions therein.
3. The Joining Party acknowledges its receipt of a copy of that
certain opinion letter issued by ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, dated June 29, 2000, and
addressing the issue of substantive consolidation as it may relate to the
Guarantor, each Lessee and the Lessor. The Joining Party 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 the Lessees or such Joining Party.
4. By its execution and delivery of this Joinder, the Joining
Party hereby becomes a Lessee for all purposes under the Lease. By its execution
and delivery of this Joinder, TFFC acknowledges that the Joining Party is a
Lessee for all purposes under the Lease.
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:
C-1-2
81
Consented to by:
BUDGET GROUP, INC.
By:
-------------------------------
Name:
Title:
▇-▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇
TO
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP III
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 Group III
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 Amended and Restated Base Indenture dated
as of December 1, 1996, as supplemented or amended by that certain Series
Supplement dated June 29, 2000 among the Buyer, Budget and the Trustee, among
the Buyer, Budget Group, Inc. ("Budget"), a Delaware corporation, as Servicer
and Budget Interestholder, and Bankers Trust Company, a New York Banking
Corporation, as the Trustee (the "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.
83
IN WITNESS WHEREOF, the Seller has executed this ▇▇▇▇ of Sale as of
_______________, 20 ___.
[SELLER]
By:
---------------------------------------
Name:
Title:
D-2
84
SCHEDULE 1
TO ▇▇▇▇ OF SALE
VEHICLES
VIN NET BOOK VALUE
--- ---------------
----------- ---------------
Total: $
===============
D-3
