EXHIBIT 4.2
TABLE OF CONTENTS
PAGE
1. DEFINITIONS....................................................................................2
2. GENERAL AGREEMENT..............................................................................2
2.1 Leasing of Group IV Vehicles..........................................................4
2.2 Right of Lessees to Act as Lessor's Agent.............................................6
2.3 Payment of Capitalized Cost by Lessor.................................................6
2.4 Non-liability of Lessor...............................................................7
2.5 Conditions Precedent..................................................................8
3. TERM..........................................................................................12
3.1 Vehicle Term: Group IV Type I Repurchase Vehicles....................................12
3.2 Vehicle Term: Group IV Type II Repurchase Vehicles...................................13
3.3 Vehicle Term: Group IV Non-Repurchase Vehicles......................................14
3.4 The "Lease Commencement Date"........................................................15
4. RENT AND CHARGES..............................................................................15
4.1 Payment of Rent......................................................................15
4.2 Payment of Monthly Supplemental Payments.............................................15
4.3 Payment of Supplemental Rent.........................................................15
4.4 Payment of Termination Payments, Casualty Payments, and Late
Return Payments......................................................................16
4.5 Late Payment.........................................................................16
4.6 Prepayments..........................................................................16
5. INSURANCE.....................................................................................16
5.1 Personal Injury and Damage...........................................................16
5.2 Delivery of Certificate of Insurance.................................................16
5.3 Changes in Insurance Coverage........................................................16
6. CASUALTY OBLIGATION...........................................................................17
6.1 Casualty.............................................................................17
7. VEHICLE USE...................................................................................17
8. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES
AND FINES.....................................................................................18
9. MAINTENANCE AND REPAIRS.......................................................................19
10. VEHICLE WARRANTIES............................................................................19
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(continued)
PAGE
11. VEHICLE RETURN GUIDELINES.....................................................................19
11.1 Vehicle Turn-in-Condition............................................................19
11.2 Return...............................................................................20
11.3 Termination Payments.................................................................20
11.4 Repurchase Price Interest............................................................20
12. DISPOSITION PROCEDURE.........................................................................21
13. ODOMETER DISCLOSURE REQUIREMENT...............................................................21
14. REDESIGNATION OF VEHICLES.....................................................................21
15. GENERAL INDEMNITY.............................................................................22
15.1 Indemnity by the Lessees.............................................................22
15.2 Reimbursement Obligation by the Lessee Group.........................................24
15.3 Defense of Claims....................................................................24
16. ASSIGNMENT....................................................................................25
16.1 Right of the Lessor to Assign this Agreement.........................................25
16.2 Limitations on the Right of the Lessee to Assign this Agreement......................25
17. DEFAULT AND REMEDIES THEREFOR.................................................................25
17.1 Lease Events of Default..............................................................25
17.2 Effect of Lease Event of Default.....................................................27
17.3 Rights of Lessor Upon Lease Event of Default or Limited
Liquidation Event of Default.........................................................28
17.4 Rights of Trustee Upon Limited Liquidation Event of Default and
Non-Performance of Certain Covenants.................................................29
17.5 Measure of Damages...................................................................30
17.6 Application of Proceeds..............................................................31
18. MANUFACTURER EVENTS OF DEFAULT................................................................32
19. LESSEE PARTIAL WIND-DOWN EVENTS...............................................................33
20. ELIGIBILITY WAIVER EVENTS.....................................................................33
21. CERTIFICATION OF TRADE OR BUSINESS USE........................................................33
22. SURVIVAL......................................................................................33
23. ADDITIONAL LESSEES............................................................................34
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TABLE OF CONTENTS
(continued)
PAGE
24. GUARANTY.......................................................................................35
24.1 Guaranty..............................................................................35
24.2 Scope of Guarantor's Liability........................................................35
24.3 Lessor's Right to Amend this Agreement, Etc...........................................36
24.4 Waiver of Certain Rights by Guarantor.................................................36
24.5 Lessees' Obligations to Guarantor and Guarantor's Obligations to
Lessees Subordinated..................................................................37
24.6 Guarantor to Pay Lessor's Expenses....................................................38
24.7 Reinstatement.........................................................................39
24.8 Pari Passu Indebtedness...............................................................39
25. RIGHTS OF LESSOR ASSIGNED TO TRUSTEE...........................................................39
26. RIGHT OF LESSEE TO DELEGATE RIGHTS AND OBLIGATIONS
HEREUNDER TO GUARANTOR.........................................................................40
27. MODIFICATION AND SEVERABILITY..................................................................40
28. CERTAIN REPRESENTATIONS AND WARRANTIES.........................................................41
28.1 Due Organization, Authorization, etc..................................................41
28.2 Financial Information; Financial Condition............................................42
28.3 Litigation............................................................................42
28.4 Liens.................................................................................42
28.5 Employee Benefit Plans................................................................43
28.6 Investment Company Act................................................................43
28.7 Regulations T, U and X................................................................43
28.8 Business Locations; Trade Names; Principal Places of Business
Locations.............................................................................43
28.9 Taxes.................................................................................43
28.10 Governmental Authorization............................................................44
28.11 Compliance with Laws..................................................................44
28.12 Eligible Vehicles.....................................................................44
28.13 Supplemental Documents True and Correct...............................................44
28.14 Accuracy of Information...............................................................44
29. CERTAIN AFFIRMATIVE COVENANTS..................................................................45
29.1 Corporate Existence; Foreign Qualification............................................45
29.2 Books, Records and Inspections........................................................45
29.3 Insurance.............................................................................45
29.4 Repurchase Programs...................................................................46
29.5 Reporting Requirements................................................................46
29.6 Taxes and Liabilities.................................................................49
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29.7 Compliance with Laws..................................................................50
29.8 Maintenance of Separate Existence.....................................................50
29.9 Trustee as Lienholder.................................................................50
30. CERTAIN NEGATIVE COVENANTS.....................................................................50
30.1 ▇▇▇▇▇▇▇, Consolidations...............................................................50
30.2 Other Agreements......................................................................51
30.3 Liens.................................................................................51
30.4 Use of Vehicles.......................................................................51
31. BANKRUPTCY PETITION AGAINST LESSOR.............................................................51
32. SUBMISSION TO JURISDICTION.....................................................................52
33. GOVERNING LAW..................................................................................52
34. JURY TRIAL.....................................................................................52
35. NOTICES........................................................................................53
36. LIABILITY......................................................................................53
37. TITLE TO REPURCHASE PROGRAMS IN LESSOR.........................................................53
38. HEADINGS.......................................................................................54
39. EXECUTION IN COUNTERPARTS......................................................................54
40. EFFECTIVENESS..................................................................................54
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TABLE OF CONTENTS
(continued)
PAGE
ANNEX A OPERATING LEASE TERMS
ANNEX B FINANCING LEASE TERMS
SCHEDULE I LESSEES ON DATE OF EXECUTION OF LEASE
SCHEDULE II NOTICE ADDRESSES
SCHEDULE 28.8 BUSINESS LOCATIONS
ATTACHMENT A-1 INFORMATION ON REFINANCED VEHICLES &
ELIGIBLE RECEIVABLES
ATTACHMENT A-2 GROUP IV VEHICLE ACQUISITION SCHEDULE
ATTACHMENT B FORM OF POWER OF ATTORNEY
ATTACHMENT C FORM OF JOINDER IN LEASE
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TEAM FLEET FINANCING CORPORATION,
AS LESSOR
BUDGET GROUP, INC.,
AS GUARANTOR
BUDGET RENT A CAR SYSTEMS, INC.
and those Subsidiaries and Affiliates
of Budget Group, Inc.
named on Schedule 1 hereto,
AS LESSEES
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP IV
Dated as of August 6, 2002
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.
MASTER MOTOR VEHICLE LEASE AGREEMENT - GROUP IV
This Second Amended and Restated Master Motor Vehicle Lease Agreement -
Group IV (this "Agreement" or "Lease"), dated as of August 6, 2002 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") and those Affiliates (other than the Budget Subsidiaries) (such
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 IV 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
IV Type I Repurchase Vehicles, Group IV Type II Repurchase Vehicles and Group IV
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 IV Type I Repurchase Vehicles, Group IV
Type II Repurchase Vehicles and Group IV Non-Repurchase Vehicles so acquired,
financed or refinanced by the Lessor for use in the daily vehicle rental
businesses of the Lessees;
WHEREAS, the parties hereto have entered into the Amended and Restated
Master Motor Vehicle Lease Agreement - Group IV, dated as of July 24, 2001 (the
"Prior Group IV Lease") and such parties desire to amend and restate the Prior
Group IV Lease in its entirety;
WHEREAS, on July 29, 2002 (the "Petition Date"), each of Budget and the
Group IV Lessees filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code and each is entering into this Lease in its capacity as a debtor
and debtor-in-possession;
WHEREAS, no Vehicles were being leased under the Prior Group IV Lease
immediately prior to the execution of this Lease and this Lease is intended to
have the same effect as a new lease entered into after the commencement of the
Bankruptcy Proceedings;
WHEREAS, the Guarantor has, pursuant to Section 24 hereof, guaranteed
the obligations of the Lessees under this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein (including the
preamble and the recitals hereto) and not otherwise defined herein 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 Deutsche Bank Trust Company Americas, formerly known as 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 IV
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 the 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
2
(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 ▇▇▇▇▇▇'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 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 Lessee
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 IV 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;
3
(v) the Collection Account (to the extent of funds and
other items therein described in clauses (a), (b) and (c) below), the
Group IV Collection Account and each other collection account
established pursuant to a Series Supplement with respect to a Group IV
Series of Notes; (a) all funds on deposit therein allocable to Group IV
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 IV Vehicles from time to
time; and (c) all investments made at any time and from time to time
with the moneys allocable to Group IV 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);
(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 IV Vehicles(a) . (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 IV Type I Repurchase Vehicles, Group IV Type II Repurchase
Vehicles and Group IV Non-Repurchase Vehicles constituting the Refinanced
Vehicles and each additional Lessor-Owned Vehicle and Financed Vehicle
identified in certain vehicle orders (each, a "Group IV 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 and (ii) Lessor-Owned 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) the refinancing of any other Eligible
Repurchase Vehicle or Eligible Non-Repurchase Vehicle (including, without
limitation, any Group IV Vehicles previously subject to any other Leases and
refinanced pursuant to this Agreement, the "Refinanced Vehicles"), and/or (ii)
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").
4
(c) With respect to any lease of Group IV 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 IV Vehicles as is
set forth in Attachment A-2 hereto (each, a "Group IV Vehicle Acquisition
Schedule"), or in such form as is otherwise requested by the Lessor. In
addition, each Lessee leasing Vehicles pursuant to such Group IV 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 Lessor Group IV Vehicle Orders to lease
Eligible Repurchase Vehicles currently owned by the Lessor pursuant to this
Agreement, together with the required Group IV Vehicle Acquisition Schedules or
Refinancing Schedule, as the case may be, in respect of such Group IV 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 Type II Repurchase Vehicle or an
Eligible Non-Repurchase Vehicle from a licensed independent automobile dealer
through an auction or other vehicle sale (each, an "Auction Acquired Vehicle")
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 IV Vehicle Order (including a Group IV
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 and to have noted
thereon the Trustee's security interest in such Auction Acquired
Vehicle pursuant to the Indenture; and
(iii) a bill of sale, substantially in the form attached
hereto as Attachment D (each, an "Auction Bill of Sale"), conveying
title to the Auction Acquired Vehicles, and copies of any certificate
given by the related auction house or dealer, as applicable, regarding
the absence of liens and/or the ownership of each such Group IV
Vehicle.
5
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 Eligible Type II Repurchase Vehicles or Eligible Non-Repurchase
Vehicles for leasing or financing under this Agreement from any independent
dealer at an auction. After any purchase or financing of Group IV Vehicles by
the Lessor at auction, such Group IV Vehicles will be subject to all the terms
and conditions of this Agreement.
(f) The Lessor shall lease to the Lessees, and the Lessees shall
lease from the Lessor, only Group IV Vehicles that are Eligible Vehicles. This
Agreement, together with any other related documents attached to this Agreement
or submitted with a Group IV 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 ▇▇▇▇▇▇'s Agent. The Lessor agrees
that any member of the Lessee Group may act as the Lessor's agent in placing
Group IV 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 IV 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 IV Vehicles to a location selected by the relevant Lessee at such
▇▇▇▇▇▇'s expense. Each Lessee agrees to accept Group IV Non-Repurchase Vehicles
as produced and delivered, subject to the right of such Lessee to reject any
such Group IV Non-Repurchase Vehicles damaged in transit or not conforming to
the related Group IV Vehicle Order. Each Lessee agrees to accept Group IV
Repurchase Vehicles as produced and delivered except each Lessee will have the
option to reject any Group IV 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 IV Repurchase Vehicle to the
Manufacturer pursuant to the preceding two sentences. Any member of the Lessee
Group that places a Group IV Vehicle Order for a Group IV Repurchase Vehicle
pursuant to this Agreement agrees that all Group IV 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 ▇▇▇▇▇▇
(a) Upon invoicing of any Group IV 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 IV Vehicle (or to
reimburse the applicable Lessee for) the costs and expenses incurred by the
Lessor or such Lessee, as
6
applicable, in connection with the acquisition of such Group IV Vehicle as
established by the invoice delivered in connection with such Group IV 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 IV Vehicle to
the extent that the same have not been included within the Capitalized Cost;
provided that solely in the case of any 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, Type II Repurchase Vehicle Value
or Non-Repurchase Vehicle Value (as applicable) as of the Vehicle Lease
Commencement Date of the Refinanced Vehicles and (y) the face amount of the
Eligible Receivables being refinanced on the Vehicle Lease Commencement Date.
(b) Each Master Lease Advance made by the Lessor (i) with respect
to a Group IV Type I Repurchase Vehicle, shall be in an amount not exceeding the
Net Book Value of such Group IV Type I Repurchase Vehicle, (ii) with respect to
a Group IV Type II Repurchase Vehicle, shall be in an amount not exceeding the
Type II Repurchase Vehicle Value of such Group IV Type II Repurchase Vehicle and
(iii) 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 at such time.
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 IV Vehicles or making
delivery thereof. AS BETWEEN THE LESSOR AND EACH LESSEE, ACCEPTANCE FOR LEASE OF
THE GROUP IV VEHICLES SHALL CONSTITUTE SUCH LESSEE'S ACKNOWLEDGMENT AND
AGREEMENT THAT SUCH LESSEE HAS FULLY INSPECTED SUCH GROUP IV VEHICLES, THAT THE
GROUP IV 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 IV 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 ▇▇▇▇▇▇ 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
7
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 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 Non-Repurchase Vehicle
Value of all Group IV 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 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 IV Invested
Amount as of such date plus the available subordinated amounts
for all Group IV Series of Notes as of such date, shall not
exceed the Maximum Non-Repurchase Vehicle Percentage (if any)
for any Group IV Series of Notes;
(ii) the quotient (expressed as a percentage)
obtained by dividing (x) the aggregate Type II Repurchase
Vehicle Value of all Group IV Type II Repurchase Vehicles
leased under this Agreement (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 IV Invested
Amount as of such date plus the available subordinated amounts
for all Group IV Series of Notes as of such date, shall not
exceed the Maximum Type II Repurchase Vehicle Percentage (if
any) for any Group IV Series of Notes;
(iii) the quotient (expressed as a percentage)
obtained by dividing (x) the aggregate Net Book Value of all
Group IV Type I Repurchase Vehicles, the Type II Repurchase
Vehicle Value of all Group IV Type II Repurchase Vehicles and
the Non-Repurchase Vehicle Value
8
of Group IV Non-Repurchase Vehicles manufactured by the same
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 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 IV Invested Amount as of such date plus the available
subordinated amounts for all Group IV Series of Notes as of
such date, shall not exceed the Maximum Manufacturer
Percentage (if any) for such Manufacturer;
(iv) if the Maximum Non-Repurchase Vehicle
Percentage, the Maximum Type II Repurchase Vehicle Percentage
or the Maximum Manufacturer Percentage for any Group IV Series
of Notes has (as calculated in clause (i), (ii) or (iii)
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;
(v) after giving effect to the inclusion of such
Vehicle under this Agreement, the (A) credit support amount
for any Group IV Series of Notes shall not be less than the
minimum credit support amount for such Series and (B) the
Letter of Credit Amount for any Group IV Series of Notes shall
not be less than the required letter of credit amount for such
Series; and
(vi) 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 Refinanced Vehicles. Only in connection
with the leasing of Refinanced Vehicles 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;
9
(ii) unless such Vehicle has been previously
liened to the Trustee, 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 and which such Lessee has been organized, which, in
each case, shall show no Liens or other security interests
(other than Permitted Liens) with respect to such Vehicles and
the related Repurchase 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) unless such Vehicle has been previously
liened to the Trustee, 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) unless such Vehicle has been previously
liened to the Trustee, 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 IV Collateral relating to such Refinanced Vehicles
and Eligible Receivables; and
(v) unless such Vehicle has been previously
liened to the Trustee, 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; and
(vi) 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 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
10
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 IV
Vehicle Order (including a Group IV 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 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 IV Vehicle Order (including a Group
IV Vehicle Acquisition Schedule) with respect to all
Lessor-Owned Vehicles to be leased to such Lessee by the
Lessor on the Vehicle Lease Commencement Date; and
(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 IV 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 IV Repurchase Vehicle, the Lessor 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 IV Collateral
relating to such Vehicle.
(h) Series Supplement. The leasing of such Group IV
Vehicle shall not be prohibited by the provisions of a Series
Supplement for a Group IV Series of Notes.
(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 IV 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 IV Vehicle Order or Refinancing Schedule have
been satisfied as of the date of such Group IV Vehicle Order or Refinancing
Schedule.
11
3. TERM.
3.1 Vehicle Term: Group IV Type I Repurchase Vehicles. The
"Vehicle Lease Commencement Date" for each Group IV Type I Repurchase Vehicle
and Eligible Receivable shall mean the day referenced as such in the Group IV
Vehicle Acquisition Schedule or Refinancing Schedule with respect to such Group
IV Type I Repurchase Vehicle or Eligible Receivable but in no event beyond the
date that funds are expended by the Lessor to acquire such Group IV Type I
Repurchase Vehicle or Eligible Receivable. The "Vehicle Term" with respect to
each Group IV Type I Repurchase Vehicle shall extend from the Vehicle Lease
Commencement Date through the earliest of (i) the Turnback Date for such Group
IV 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 IV 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 IV
Collection Account from or on behalf of the applicable Lessee, (iv) the date
that such Vehicle is purchased by the applicable Lessee pursuant to paragraph 6
or 7 of Annex A or paragraph 8 of Annex B and the Vehicle Purchase Price in the
case of Vehicles purchased pursuant to Annex A, or the Net Book Value of the
applicable Vehicles in the case of Vehicles purchased pursuant to Annex B with
respect to such purchase (and any unpaid Monthly Base Rent, Monthly Variable
Rent, Monthly Finance Rent, and Monthly Supplemental Rent with respect to such
Vehicle) is received by the Trustee in the Group IV 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" for such Group IV Type I Repurchase
Vehicle). The Lessor and each Lessee agree that each Lessee shall use its
commercially reasonable efforts to deliver each Group IV Type I Repurchase
Vehicle to the related Manufacturer or the designated auction site, as
applicable, under a Repurchase Program (unless a Manufacturer Event of Default
has occurred with respect to such Manufacturer) (a) not prior to the end of the
minimum holding period specified in the related Repurchase Program (prior to
which the Lessor may not deliver such Group IV Type I Repurchase Vehicle without
penalty (the "Type I Minimum Term")) and (b) not later than the end of the
maximum holding period (after which the Lessor may not return such Group IV Type
I Repurchase Vehicle which is a Lessor-Owned Vehicle without penalty (the "Type
I Maximum Term")); provided, however, that the Lessee may dispose of a Group IV
Type I Vehicle other than in accordance with the applicable Repurchase Program
only if the Disposition Proceeds will be greater than the amounts payable in
respect of such Vehicle under the Repurchase Program, and provided further, that
if for any reason, a Lessee fails to deliver a Group IV Type I 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
Type I Minimum Term and the expiration of the Type I Maximum Term, such Lessee
shall be obligated to (x) purchase such Group IV Type I Repurchase Vehicle from
the Lessor on the first Due Date after the expiration of the Type I Maximum Term
for an amount equal to the Vehicle Purchase Price with respect to such Group IV
Repurchase
12
Vehicle or (y) redesignate such Group IV Type I Repurchase Vehicle as a Group IV
Non-Repurchase Vehicle in accordance with Section 14 hereof. Each Lessee will
pay the equivalent of the Rent for the Type I Minimum Term for Group IV Type I
Repurchase Vehicles which are Lessor-Owned Vehicles and are returned before the
Type I 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 IV Type I 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 IV Type II Repurchase Vehicles. The
"Vehicle Lease Commencement Date" for each Group IV Type II Repurchase Vehicle
shall mean the day referenced as such in the Group IV Vehicle Acquisition
Schedule or Refinancing Schedule with respect to such Group IV Type II
Repurchase Vehicle but in no event beyond the date that funds are expended by
the Lessor to acquire such Group IV Type II Repurchase Vehicle. The "Vehicle
Term" with respect to each Group IV Type II Repurchase Vehicle shall extend from
the Vehicle Lease Commencement Date through the earliest of (i) the Turnback
Date for such Group IV Type II 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 to such sale are received by the Trustee in the Group IV
Collection Account (from such third party or from any member of the Lessee Group
on such third party), and such funds equal or exceed the Type II Repurchase
Vehicle Value of such Group IV Type II Repurchase Vehicle, (iii) if the Group IV
Type II Repurchase Vehicle becomes a Casualty, the date funds in the amount of
the Type II Repurchase Vehicle Value thereof are received by the Trustee in the
Group IV Collection Account from or on behalf of the applicable Lessee, (iv) the
date that the Group IV Type II Repurchase Vehicle is purchased by the applicable
Lessee pursuant to paragraph 6 or 7 of Annex A or paragraph 8 of Annex B and the
Vehicle Purchase Price, in the case of Vehicles purchased pursuant to Annex A,
or Net Book Value of the applicable Vehicle, in the case of Vehicles purchased
pursuant to Annex B, with respect to such purchase (and any unpaid Monthly Base
Rent, Monthly Variable Rent, Monthly Finance Rent and Monthly Supplemental Rent
with respect to such Group IV Type II Repurchase Vehicle) is received by the
Trustee 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") for such Group IV Type
II Repurchase Vehicle. The Lessor and each Lessee agree that each Lessee shall
use its commercially reasonable efforts to deliver each Group IV Type II
Repurchase Vehicle to the related Manufacturer or the designated auction site,
as applicable, under a Repurchase Program (unless a Manufacturer Event of
Default has occurred with respect to such Manufacturer) (a) not prior to the end
of the minimum holding period specified in the related Repurchase Program (prior
to which the Lessor may not deliver such Group IV Type II Repurchase Vehicle
without penalty (the "Type II Minimum Term")) and (b) not later than the end of
the maximum holding period (after which the Lessor may not return such Group IV
Type II Repurchase Vehicle which is a Lessor-Owned Vehicle without penalty (the
"Type II Maximum Term")); provided, however, that the Lessee may dispose of a
Group IV Type II Vehicle other than in accordance with the applicable
13
Repurchase Program only if the Disposition Proceeds will be greater than the
amounts payable in respect of such Vehicle under the Repurchase Program, and
provided further, that if for any reason, a Lessee fails to deliver a Group IV
Type II 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 Type II Minimum Term and the expiration of the Type II Maximum
Term, such Lessee shall be obligated to (x) purchase such Group IV Repurchase
Vehicle from the Lessor on the first Due Date after the expiration of the Type
II Maximum Term for an amount equal to the Vehicle Purchase Price with respect
to such Group IV Type II Repurchase Vehicle, (y) dispose of such Group IV Type
II Repurchase Vehicle promptly and in a commercially reasonable manner so as to
maximize proceeds from the disposition of such Vehicle or (z) redesignate such
Group IV Type II Repurchase Vehicle as a Group IV Non-Repurchase Vehicle in
accordance with Section 14 hereof; and in any event pay the Late Return Payment
specified in Section 12. Each Lessee will pay the equivalent of the Rent for the
Type II Minimum Term for Group IV Type II Repurchase Vehicles which are
Lessor-Owned Vehicles and are returned before the Type II 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 IV Type II Repurchase Vehicle to another Lessee under this Agreement or to
a lessee under another Lease relating to another Series under the Base
Indenture.
3.3 Vehicle Term: Group IV Non-Repurchase Vehicles. The "Vehicle
Lease Commencement Date" for each Group IV Non-Repurchase Vehicle shall mean the
day referenced as such in the Group IV Vehicle Acquisition Schedule or
Refinancing Schedule with respect to such Group IV Non-Repurchase Vehicle but in
no event beyond the date that funds are expended by the Lessor to acquire such
Group IV Non-Repurchase Vehicle. The "Vehicle Term" with respect to each Group
IV Non-Repurchase Vehicle shall extend from the Vehicle Lease Commencement Date
through the earliest of (i) if the Group IV 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 IV 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 IV Non-Repurchase Vehicle, (ii) if the Group IV
Non-Repurchase Vehicle becomes a Casualty, the date funds in the amount of the
Non-Repurchase Vehicle Value thereof are received by the Trustee in the Group IV
Collection Account from or on behalf of the applicable Lessee, (iii) the date
that the Group IV Non-Repurchase Vehicle is purchased by the applicable Lessee
pursuant to paragraph 6 or 7 of Annex A or paragraph 8 of Annex B and the
Vehicle Purchase Price, in the case of Vehicles purchased pursuant to Annex A,
or Net Book Value of the applicable Vehicle, in the case of Vehicles purchased
pursuant to Annex B, with respect to such purchase (and any unpaid Monthly Base
Rent, Monthly Variable Rent, Monthly Finance Rent and Monthly Supplemental Rent
with respect to such Group IV 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 each Group IV
Non-Repurchase Vehicle
14
(a) 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) within 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 IV Series of Notes, approved by
Noteholders of the Group IV Series of Notes holding more than 50% of the
aggregate Invested Amounts of all outstanding Group IV Series (the "Majority
Group IV Noteholders") (such period described in clauses (a) and (b) above, the
"Non-Repurchase Maximum Term"). If a Group IV 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 IV 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 such Group IV Vehicle through the Vehicle Lease
Commencement Date for such Group IV Vehicle.
3.4 The "Lease Commencement Date" shall mean the earlier of (i)
the date of the issuance of the Series 2002-1 Notes as the first Group IV Series
of Notes issued in connection with this Second Amended and Restated Master Motor
Vehicle Lease Agreement - Group IV 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 IV Series of Notes and all outstanding
Carrying Charges and (ii) the Vehicle Lease Expiration Date for the last Group
IV 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.
4. 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 ▇▇▇▇▇▇'s pro rata share (on the basis of the
aggregate Net Book Value of Group IV 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 IV Series of Notes for
the Related Month, plus (y) the Carrying Charges for the Related Month allocable
to any Group IV Series of Notes, minus (z) the aggregate of
15
all Monthly Variable Rent and Monthly Finance Rent accrued with respect to the
Related Month for all Group IV 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 IV 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.
4.6 Prepayments. To the extent provided in 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 IV
Vehicles leased by such Lessee under this Agreement.
5. INSURANCE. Budget represents that it shall at all times
maintain insurance coverage for each Lessee that is a Budget Subsidiary 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 that is a Budget Subsidiary 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 IV 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 IV
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 that
are Budget Subsidiaries, 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
16
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 that are Budget Subsidiaries, 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
(ii) So long as a Rating Agency is then currently
requested to rate any Group IV 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 IV Series of
Notes to the effect that such proposed change in insurance will not
cause a reduction in or a withdrawal of such rating.
6. CASUALTY OBLIGATION.
6.1 Casualty. If a Group IV Vehicle becomes a Casualty, then the
Lessee that is leasing such Group IV 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 IV Vehicle becomes a Casualty (other than a Casualty in respect of
which a Late Return Payment is payable under Section 12), pay to the Lessor the
Net Book Value of each such Group IV Vehicle (such payment, a "Casualty
Payment"). Upon payment by the Lessee to the Lessor of the Casualty Payment for
any Group IV Vehicle that has become a Casualty (i) the Lessor shall cause title
to such Group IV Vehicle to be transferred to the relevant Lessee to facilitate
liquidation of such Group IV Vehicle by the Lessee, (ii) such Lessee shall be
entitled to any physical damage insurance proceeds applicable to such Group IV
Vehicle, and (iii) the Lien of the Trustee on such Group IV Vehicle shall be
released by the Servicer.
7. VEHICLE USE. So long as no Lease Event of Default or Limited
Liquidation Event of Default with respect to any Group IV Series of Notes 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 IV Vehicles leased hereunder in the regular course of
business of such Lessee. Such use shall be confined primarily to the states of
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 IV 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
17
establish, perfect and maintain the Lessor's title to and interest in the Group
IV 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 IV 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 IV 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 IV Vehicles and the
related Certificates of Title shall have been taken and (ii) all legal
requirements applicable to such Group IV Vehicles shall have been met or
obtained. Following a Lease Event of Default, Lessee Partial Wind-Down Event,
Limited Liquidation Event of Default with respect to any Group IV Series of
Notes or, with respect to the Group IV 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 IV Vehicles leased by such Lessee as of such
date are principally located. The Lessee shall not knowingly use any Group IV
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
IV Vehicles. Each Lessee shall comply with all applicable statutes, decrees,
ordinances and regulations regarding acquiring, titling, registering, leasing,
insuring and disposing of Group IV Vehicles and shall take reasonable steps to
ensure that drivers of such Group IV 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 IV 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 IV Vehicles and registration
certificates, Certificates of Title and related documents covering Group IV
Vehicles wherever the same shall be located. Group IV 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 IV Vehicle
so subleased.
8. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES.
The Lessee Group, at its expense, shall be responsible for proper registration
and licensing of Group IV Vehicles, and titling of Group IV Vehicles in the name
of the Lessor, in each case with the Lien of the Trustee noted thereon, and,
where required, shall have Group IV 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 IV 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 IV Vehicle during the
Vehicle Term for such Group IV Vehicle or imposed during the Vehicle Term for
such Group IV Vehicle by any Governmental Authority or any court of law or
equity with respect to Group IV Vehicles in connection with the relevant
Lessee's operation of Group IV Vehicles, and the Lessor, in its discretion, may,
but shall not be obligated to, pay any
18
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 IV Vehicle
or impairs the ability to transfer clear title to such Group IV 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 Title. Notwithstanding anything herein to the
contrary, the Lessor may terminate such Power of Attorney as provided in Section
19 hereof.
9. MAINTENANCE AND REPAIRS. Each Lessee shall pay for all
maintenance and repairs to keep Group IV Vehicles in good working order and
condition, and will maintain Group IV Vehicles as required in order to keep the
Manufacturer's warranty in force, and in the case of Group IV Repurchase
Vehicles, shall comply with all requirements of the related Repurchase Program
to the extent necessary to maintain the eligibility of such Group IV Vehicles.
Each Lessee will return Group IV 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 IV
Vehicle. Each Lessee will pay, or cause to be paid, all usual and routine
expenses incurred in the use and operation of Group IV 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 ▇▇▇▇▇▇'s
behalf for maintenance, repair, operation or use of Group IV 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 IV
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 IV Vehicle made by the relevant Lessee
shall remain the property of such Lessee if it can be disconnected from the
Group IV Vehicle without impairing the functioning or resale value thereof,
other than any function or value provided by such addition or improvement.
10. VEHICLE WARRANTIES. If a Group IV 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 IV Vehicle.
11. VEHICLE RETURN GUIDELINES.
11.1 Vehicle Turn-in-Condition. As used herein "vehicle turn-in
condition" with respect to each Group IV Repurchase Vehicle will be determined
in accordance with
19
the related Repurchase Program. Group IV Repurchase Vehicles not meeting the
applicable Repurchase Program's vehicle turn-in condition guidelines will,
unless redesignated as Group IV 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 IV Repurchase
Vehicle (other than a Group IV Type II Repurchase Vehicle disposed of in the
manner described in the third succeeding sentence hereto or a Casualty and other
than Group IV Repurchase Vehicles from Manufacturers with respect to which a
Manufacturer Event of Default has occurred and is continuing) 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 Type I Maximum Term or Type II Maximum Term, as applicable, for such Group
IV Vehicle. Each Lessee agrees that the Group IV Repurchase Vehicles will be in
vehicle turn-in condition as specified in the applicable Repurchase Program. Any
rebates or credits applicable to the unexpired term of any license plates for a
Group IV Repurchase Vehicle shall inure to the benefit of the relevant Lessee.
Each Lessee agrees to use commercially reasonable efforts to dispose of each
Group IV Non-Repurchase Vehicle, each Group IV Type II Repurchase Vehicle not
returned to a Manufacturer and each Group IV Repurchase Vehicle from a
Manufacturer with respect to which a Manufacturer Event of Default has occurred
and is continuing (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 IV Non-Repurchase
Vehicle, the Type I Maximum Term for such Group IV Type I Repurchase Vehicle or
the Type II Maximum Term for such Group IV Type II Repurchase Vehicle, as
applicable. The Lessee shall not return Group IV Repurchase Vehicles to any
Manufacturer with respect to which a Manufacturer Event of Default has occurred
and is continuing.
11.3 Termination Payments. Upon receipt of (i) payment of the
Repurchase Price or Guaranteed Payment with respect to each Group IV Repurchase
Vehicle from the Manufacturer (or the receipt of payment of the Repurchase Price
of each Group IV 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 IV 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 IV Repurchase Vehicle for the
period between the Turnback Date for such Group IV Vehicle and receipt of such
Repurchase Price by the
20
Lessor from the Manufacturer ("Repurchase Price Interest"). The provisions of
this Section 11.4 will survive the expiration or earlier termination of the
Term.
12. DISPOSITION PROCEDURE. Each Lessee will comply with the
requirements of law and, with respect to Group IV 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 IV Vehicle to a third party
or the return of any Group IV Repurchase Vehicle in accordance with an Eligible
Repurchase Program. In addition, with respect to the return of a Group IV
Repurchase Vehicle to a Manufacturer or the delivery of a Group IV 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 IV Repurchase Vehicle and accepted by the Manufacturer or its agent at the
time of Group IV Repurchase Vehicle return or delivery, as applicable. If a
Group IV Repurchase Vehicle (other than a Vehicle that becomes a Casualty prior
to the end of the applicable Vehicle Term) 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 Type I Maximum Term or
Type II Maximum Term, as applicable, with respect to such Group IV Repurchase
Vehicle, the relevant Lessee shall, unless such Group IV Repurchase Vehicle has
been redesignated as a Group IV Non-Repurchase Vehicle in accordance with
Section 14 hereof or, in the case of a Group IV Type II Repurchase Vehicle,
otherwise sold in accordance with Section 3.2 hereof, purchase such Group IV
Repurchase Vehicle for the appropriate Vehicle Purchase Price (or Net Book Value
in the case of a Vehicle leased under Annex B) and pay the Lessor such amount
(such amount, the "Late Return Payment") within fifteen (15) days after the end
of the Type I Maximum Term or Type II Maximum Term, as applicable, (together
with any Repurchase Price Interest accrued from the last day of the Type I
Maximum Term or Type II Maximum Term, as applicable, to the date that such
payment is received by the Lessor).
13. ODOMETER DISCLOSURE REQUIREMENT. Each Lessee agrees to comply
with all requirements of law and, with respect to Group IV Repurchase Vehicles,
all Repurchase Program requirements in connection with the transfer of ownership
of any Group IV Vehicle by the Lessor, including, without limitation, the
submission of any required odometer disclosure statement at the time of any such
transfer of ownership.
14. REDESIGNATION OF VEHICLES
(a) Upon a Group IV 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 IV 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 IV Non-Repurchase Vehicle if such Group IV
Vehicle, as a Group IV Non-Repurchase Vehicle, will be an Eligible
Non-Repurchase Vehicle and an Eligible Vehicle and if either (a) such
21
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 IV 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 IV Vehicle, relating to the decrease, if any, of
the Net Book Value of such Group IV 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 IV Non-Repurchase Vehicle
as a Group IV Repurchase Vehicle if such Group IV Vehicle, as a Group IV
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 IV 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 IV Vehicle were a Group IV
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
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.
15. GENERAL INDEMNITY.
15.1 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
22
Group IV 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 IV Vehicle or the acquisition, purchase, sale, rental, use,
operation, control, ownership or disposition of any Group IV 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 IV Vehicle
or any action or transaction by such member of the Lessee Group with
respect thereto or pursuant to this Agreement;
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 IV Series of Notes, any and all
fees of the Servicer under the Indenture (to the extent attributable to
any Group IV Series of Notes), fees, if any, payable to the Rating
Agencies in connection with their rating of any Group IV 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 IV
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 IV Series of
Notes in connection with the administration, enforcement, waiver or
amendment of this Agreement and any
23
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 IV 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 in fact indemnifies 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 IV 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 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 IV 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
24
above which the relevant member of the Lessee Group may have against the
Manufacturer.
16. 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 IV 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 ▇▇▇▇▇▇'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 at the written direction of the
Required Beneficiaries, 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.
17. 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 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, of 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 assignment or transfer
of this Agreement by any member of the Lessee Group occurs unless
consented to by the Lessor and the Trustee at the written direction of
the Required Beneficiaries;
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
25
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 Bankruptcy Related Events. Subject to the provisions
of Section 19 hereof regarding Lessee Partial Wind-Down Events, (i) the
entry of an order in the current case in Bankruptcy Court with respect
to the Guarantor or any Group IV Lessee converting such case from a
Chapter 11 case to a Chapter 7 case or Budget or any affiliate thereof
shall file any pleading requesting any such relief; (ii) the
appointment, in such case, of a responsible officer, chapter 11
trustee, or an examiner with powers beyond the duty to investigate and
report, as set forth in section 1106(a)(3) and (4) of the Bankruptcy
Code or (iii) the filing by the Guarantor or any affiliate thereof of a
motion for the Bankruptcy Court to enter an order, or the entry of an
order with the Bankruptcy Court, in either case without the express
prior written consent of the Group IV Noteholders, to revoke, reverse,
stay, modify, supplement or amend the order of the Bankruptcy Court
authorizing the entry into this Lease by the Guarantor and each Group
IV Lessee and two (2) Business Days elapse without the withdrawal,
dismissal or stay of such motion or order, as the case may be;
17.1.6 Invalidity of Group IV Related Documents. All or any
material portion of this Lease shall at any time and for any reason not
be in full force and effect or be declared to be null and void, or a
proceeding shall be commenced by a Group IV Lessee or the Guarantor, or
by any governmental authority having jurisdiction over the Group IV
Lessee or the Guarantor, as applicable, seeking to establish the
invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof);
17.1.7 Required Credit Support Amount. The credit support
amount for any Group IV 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 two Business Days;
26
17.1.8 Credit Agreement Event. So long as the Series 2002-1
Note is outstanding, a Series 2002-1 Event of Default has occurred and
is continuing.
17.1.9 The Bankruptcy Order. The Related Documents and the
Bankruptcy Order shall, for any reason, cease to create a valid Lien on
any of the Group IV Collateral purported to be covered thereby or such
Lien shall cease to be a perfected, first priority Lien pursuant to
section 364 of the Bankruptcy Code against the Group IV Collateral of
any of the Group IV Lessees (or an application or motion shall be filed
by any of Budget or the Group IV Lessees for the approval of an order
of the Bankruptcy Court which would result in such Lien ceasing to be a
perfected, first priority Lien pursuant to section 364 of the
Bankruptcy Code against the Group IV Collateral of any of the Group IV
Lessees), or the Bankruptcy Court Order as it relates to any material
provision of any Related Document purported to be covered thereby
shall, for any reason, cease to be valid and binding on each of Budget
and the Group IV Lessees party thereto or any of Budget or any of the
Group IV Lessees shall so state in writing; provided that, if either
(x) the Lien on the Group IV Collateral referred to above shall cease
to be a perfected, first priority Lien pursuant to section 364 of the
Bankruptcy Code against the Group IV Collateral of any of the Group IV
Lessees or (y) the Bankruptcy Order is no longer valid or binding on
any of Budget or the Group IV Lessees, as a result of an order of the
Bankruptcy Court entered subsequent to the Bankruptcy Court Order, two
(2) Business Days elapse without the withdrawal, dismissal or stay of
such subsequent order.
17.1.10 Lift Stay Motion or Order. A motion is filed, or
consented to in writing, by Budget or either Group IV Lessee with the
Bankruptcy Court for entry of an order, or the entry by the Bankruptcy
Court of an order, in either case without the express written consent
of the Agent or the Series 2002-1 Note Purchaser, granting relief from
the automatic stay under Section 362 of the Bankruptcy Code that (i)
permits a pre-petition secured party to foreclose on assets of Budget
or any Group IV Lessee which have a value in excess of $35 million in
the aggregate or (ii) permits the Trustee to enforce its rights and
remedies in respect of a failure to make Rent payments due under a
Lease and, in either case, two (2) Business Days elapse without the
withdrawal, dismissal or stay of such motion or order, as the case may
be; provided, however, that any motion for an order, or any order,
granting Liens or other relief from the automatic stay under Section
362 of the Bankruptcy Code entered into on or prior to the date hereof
in connection with Budget's or the Group IV Lessees'
debtor-in-possession financing shall not constitute an Event of Default
hereunder.
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, 17.1.6 (to the extent that
all or a material portion of this Lease shall at any time and for any reason not
be in full force and effect or be declared null and void), 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
27
under all Outstanding Group IV 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 IV Series of
Notes were then due and payable in full) and, with respect to Group IV
Non-Repurchase Vehicles and Group IV Type II 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 Limited Liquidation Event of Default, in each case, with respect
to any outstanding Group IV Series of Notes shall occur, the Lessor or the
Trustee (provided a Responsible Officer of the Trustee has actual knowledge or
has received written notice of such Lease Event of Default or any Limited
Liquidation Event of Default) 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 or Limited
Liquidation Event of Default. If a Lease Event of Default or Limited Liquidation
Event of Default (in each case, with respect to any outstanding Group IV Series
of Notes) 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), 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 IV Vehicles, and the Lessor may direct
delivery by the Lessee Group (or the applicable member(s) thereof) of
documents of title to the Group IV Vehicles, whereupon all rights and
interests of the Lessee Group (or the applicable member(s) thereof) to
the Group IV 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
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 IV 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 IV 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 of such Group IV Vehicles at least five days prior to the proposed
sale, which
28
shall be deemed commercially reasonable, and any Lessee may purchase
the Group IV 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 Limited Liquidation Event of Default
and Non-Performance of Certain Covenants.
(i) If a Limited Liquidation Event of Default or a
Manufacturer Event of Default (in each case, with respect to any
outstanding Group IV Series of Notes), 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 Group IV 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 Base Indenture) upon a
Limited Liquidation Event of Default with respect to any outstanding
Group IV Series of Notes, including the right to take possession of all
Group IV Vehicles immediately from the Lessees.
(ii) With respect to Group IV 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
29
with respect to (i) Group IV 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 IV Repurchase
Vehicles, any such Group IV 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 IV Vehicles free
of Liens (other than Permitted Liens and the Lien in favor of the
Trustee) and to maintain the Trustee's Lien perfected on the Group IV
Collateral, the Trustee shall have the right to take actions reasonably
necessary to correct such default with respect to the subject Group IV
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 Limited Liquidation Event of
Default with respect to any outstanding Group IV Series of Notes, the
Guarantor and each Lessee will return any Group IV Repurchase Vehicles
to the related Manufacturer in accordance with the instructions of the
Lessor.
(v) Upon the occurrence of a Limited Liquidation Event of
Default with respect to any outstanding Group IV Series of Notes, the
Lessor shall have the right to dispose of (x) those Group IV Repurchase
Vehicles not accepted by the related Manufacturer under the applicable
Repurchase Program pursuant to clause (iv) above and (y) all Group IV
Non-Repurchase Vehicles and to direct the Guarantor or the applicable
Lessee to dispose of such Group IV 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, Section 9.3 (in each case, with respect to
any Group IV Collateral) 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 (with respect to
any Group IV Collateral) and that, under certain circumstances set
forth in the Base Indenture, the Trustee may act in lieu of the Lessor
in the exercise of such rights, remedies, powers, privileges and
claims.
17.5 Measure of Damages. If a Lease Event of Default or Limited
Liquidation Event of Default (in each case, with respect to any outstanding
Group IV Series of Notes) 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:
30
(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 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 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 17, 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 IV Vehicles leased
hereunder (either by receipt of payment from the Manufacturers under
Repurchase Programs, from sales of Group IV 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 IV 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 IV 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 IV 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 expenses incurred by the Lessor in
connection with such sale or disposition, including any reasonable costs
associated with repairing any Group IV 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 IV Type II Repurchase Vehicles or Group IV
31
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 IV Vehicle Orders from such Manufacturer (each, a
"Defaulting Manufacturer") for (x) any additional Group IV Vehicles in the event
of any Manufacturer Event of Default arising under Section 18.1 or 18.3, (y) any
additional Group IV 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 IV Non-Repurchase Vehicles in the event of any Manufacturer Event of
Default arising under Section 18.4(ii) and (b) shall cancel any Group IV 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 IV 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 (a) in the case of an Eligible Type
I Repurchase Manufacturer, such failure continues for more than sixty (60) days
following the Turnback Date such that the aggregate of any such amounts not paid
for more than 60 days are in the aggregate in excess of $40,000,000 in respect
of Group IV Vehicles and (b) in the case of an Eligible IV Type II Repurchase
Manufacturer, such failure continues for more than forty-five (45) days
following the Turnback Date such that the aggregate of any such amounts not paid
for more than 45 days are in the aggregate in excess of $10,000,000 in respect
of Group IV Vehicles or such higher amount determined by the Rating Agencies (or
the Required Noteholders of any Group IV Series of Notes that is not rated),
and, in all cases, 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 Type I
Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer in the case
of Group IV Repurchase Vehicles, or (ii) Eligible Non-Repurchase Manufacturer,
in the case of Group IV Non-Repurchase Vehicles.
32
18.5 The Repurchase Program of such 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 17.1.3, 17.1.4, or 17.1.5 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 IV Vehicle Orders for additional Group IV
Vehicles and (b) shall cancel Group IV Vehicle Orders for Vehicles; provided,
however, that if a Group IV 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 IV 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
IV 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 Required Noteholders in respect of each Group IV Series of Notes
waives such Manufacturer Wind-Down Event, the Lessees may continue to place
Vehicle Orders for the purchase of Group IV Repurchase Vehicles or Group IV
Non-Repurchase Vehicles from such Defaulting Manufacturer through this
Agreement; provided, however, the total Net Book Value of all Group IV
Repurchase Vehicles leased hereunder through any Defaulting Manufacturer shall
not exceed the Maximum Manufacturer Percentage, if any, for the Defaulting
Manufacturer of the Net Book Value of all Group IV 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 Manufacturer Percentage,
if any, for the Defaulting Manufacturer shall equal that percentage of the
proposed Maximum Defaulting Manufacturer Percentage which corresponds to the
percentage of Group IV Noteholders which consent to such waiver. Any such waiver
by any such Required 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 taxes pursuant to any provision
hereof, such liability will continue,
33
notwithstanding the expiration or termination of this Agreement, until all such
amounts are paid or reimbursed by such ▇▇▇▇▇▇.
23. ADDITIONAL LESSEES. Any Affiliate of or direct or indirect
Subsidiary of the Guarantor (each, a "Guarantor Subsidiary") 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 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 ▇▇▇▇▇ filed against such party
that purport to affect any Group IV 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, the Lessor as assignor and
the Trustee as secured party covering the collateral described in
Section 2(b) hereof;
(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;
34
(ix) Rating Agency Confirmation under and as defined in
the related Series Supplement with respect to such party becoming a
"Lessee" under this Agreement shall have been obtained with respect to
each Group IV Series of Notes; 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 of the applicable Joinder in Lease executed by the Lessor, such
Guarantor Subsidiary shall for all purposes be deemed to be a "Lessee" for
purposes of this Agreement (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 IV 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 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
35
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 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;
36
(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, and the payment of any Subordinated Debt 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:
(i) first, 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
37
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 in accordance with the priorities specified in clause (i)
above.
(b) The Guarantor authorizes and directs each Lessee and each
Lessee authorizes and directs the Guarantor to take such action as may be
necessary or appropriate to effectuate and maintain the subordination provided
herein.
(c) No right of any holder of the Guaranteed Obligations to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Guarantor, any
Lessee, the Lessor or any other Person or by any noncompliance by the Guarantor,
any Lessee, the Lessor or any other Person with the terms, provisions and
covenants hereof or of the Related Documents regardless of any knowledge thereof
that any such holder of the Guaranteed Obligations may have or be otherwise
charged with.
(d) Nothing express or implied herein shall give any Person other
than the Lessees, the Lessor, the Trustee and the Guarantor any benefit or any
legal or equitable right, remedy or claim hereunder.
(e) If the Guarantor shall institute or participate in any suit,
action or proceeding against any Lessee or any Lessee shall institute or
participate in any suit, action or proceeding against the Guarantor, in
violation of the terms hereof, such Lessee or the Guarantor, as the case may be,
may interpose as a defense or dilatory plea this subordination, and the holders
of the Guaranteed Obligations are irrevocably authorized to intervene and to
interpose such defense or plea in their name or in 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%.
38
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 ▇▇▇▇▇▇ 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 IV
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 IV Series of Notes or, subject to the
provisions of Section 19 hereof, a Lessee Partial Wind-Down Event or,
with respect to Group IV 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 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 (in
each case, with respect to any outstanding Group IV Series of Notes)
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
39
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 Group IV
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 IV Vehicles leased under this
Agreement, the Certificates of Title with respect thereto, the Group IV
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.
27. MODIFICATION AND SEVERABILITY. (a) 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 IV Series of Notes and, if the Series 2002-1 Notes are
still outstanding, each Series 2002-1 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 IV 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
40
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 IV 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 IV 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.
(b) Notwithstanding anything to the contrary in the foregoing
clause (a) or in the Base Indenture, this Agreement may be amended without the
consent of the Noteholders of any Group IV Series of Notes to provide for the
leasing of vehicles under this Agreement of a type not provided for as of the
Lease Commencement Date; provided that (i) the Lessor shall have delivered to
the Trustee Rating Agency Confirmation for any outstanding Group IV Series of
Notes with respect to such amendments, (ii) no Amortization Event with respect
to any outstanding Group IV Series of Notes then exists or will result from such
amendment or from the leasing of such vehicles under this Agreement and (iii)
each Enhancement Provider with respect to any outstanding Group IV Series of
Notes shall have consented in writing to such amendments and to the leasing of
such vehicles under this Agreement. The Servicer shall deliver to the Trustee
and, so long as the Series 2002-1 Note is outstanding, the Agent an Officer's
Certificate stating that the conditions of this Section 27(b) have been
satisfied with respect to any amendment under this Section 27(b).
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 IV 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 (and, with respect to each Group IV
Series of Notes issued after the date hereof, the Closing Date with respect to
such Series of Notes and, with respect to each Person becoming a Lessee
hereunder pursuant to Section 23 hereof, as of the date of such joinder):
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), other than
the entry of the Bankruptcy Order, have received all necessary governmental and
other
41
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 applicable. Upon entry of the Bankruptcy Order,
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 below) which have been or shall hereafter be furnished to the Lessor
or the Trustee for the purposes of or in connection with this Agreement or the
Related Documents have been and will be prepared in accordance with GAAP and do
and will present fairly the financial condition of the entities involved as of
the dates thereof and the results of their operations for the periods covered
thereby. Such financial data include the following financial statements and
reports which have been furnished to the Lessor and the Trustee on or prior to
such Closing Date, the audited consolidated balance sheets of Budget and each
Non-Budget Lessee as of December 31, 2001 (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.
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 ▇▇▇▇▇▇'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 IV Vehicles leased under this Agreement are
free and clear of all Liens other than (i) Permitted Liens, (ii) Liens in favor
of the Trustee and (iii) subordinate Liens that may have been granted to
debtor-in-possession lenders pursuant to an order of the Bankruptcy Court
entered on or prior to the date of this Lease. The Trustee has obtained, and
will continue to obtain, as security for the liabilities under the Indenture and
the Group IV Series of Notes, a first priority perfected Lien on all Group IV
Vehicles leased under this Agreement. Except as otherwise permitted under the
Indenture, all Vehicle Perfection and Documentation Requirements with respect to
all Group IV Vehicles leased under this Agreement on or after the date hereof
have and will continue to be satisfied.
42
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 IV 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 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 T, U and X of the Board of Governors of the
Federal Reserve System).
28.8 Business Location; 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 assessments
payable by it that have become due after the Petition Date, 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 IV, there is no ongoing
material audit (other than routine sales tax audits and other routine audits)
or, to the Guarantor's or any ▇▇▇▇▇▇'s knowledge, material tax liability for any
period for which returns have been
43
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 be retained by it
pursuant to any Requirement of Law, except where failure to retain such records
would not have a Material Adverse Effect on the Guarantor or such Lessee, as
applicable.
28.12 Eligible Vehicles. Each Group IV Repurchase Vehicle is or will
be, as the case may be, on the Vehicle Lease Commencement Date with respect to
such Group IV Repurchase Vehicle, an Eligible Repurchase Vehicle. Each Group IV
Non-Repurchase Vehicle is or will be, as the case may be, on the Vehicle Lease
Commencement Date with respect to such Group IV Non-Repurchase Vehicle, an
Eligible Non-Repurchase Vehicle or an Eligible Repurchase Vehicle, as the case
may be.
28.13 Supplemental Documents True and Correct. All information
contained in any Group IV 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
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.
44
Each of the foregoing representations and warranties will be deemed to
be remade as of the Closing Date with respect to each Group IV 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. Except to the
extent excused by the Bankruptcy Code or an order of the Bankruptcy Court, 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 IV 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 IV Vehicles leased under this Agreement including, without
limitation, with respect to Group IV 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 IV Vehicles 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
45
Group IV Vehicles as well as damage to Group IV 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 IV Repurchase
Vehicle leased by each Lessee hereunder (a) unless previously purchased by such
Lessee pursuant to this Agreement, redesignated as a Group IV Non-Repurchase
Vehicle pursuant to Section 14 hereof or, in the case of any Group IV Type II
Repurchase Vehicle, otherwise disposed of outside the applicable Repurchase
Program in accordance with 3.2, turn in such Group IV Repurchase Vehicle to the
relevant Manufacturer within the Repurchase Period therefor, (b) dispose of such
Group IV 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. (a) 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 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
46
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, Potential Amortization Event, Manufacturer
Event of Default, Potential Manufacturer Event of Default, Lessee
Partial Wind-Down Event or Potential Lessee Partial Wind-Down Event, in
each case, with respect to any outstanding Group IV Series of Notes or
Group IV Collateral, as applicable, 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 IV Vehicles leased hereunder during the Related Month by
such Lessee, (ii) the Capitalized Cost for Group IV Vehicles that are
Lessor-Owned Vehicles or Auction Acquired Vehicles, (iii) the Net Book
Value of Group IV Type I Repurchase Vehicles as of the end of the
Related Month, (iv) the Type II Repurchase Vehicles Value of Group IV
Type II Repurchase Vehicles as of the end of the Related Month, (v) the
Non-Repurchase Vehicle Value of Group IV Non-Repurchase Vehicles as of
the end of the Related Month, (vi) the VINs for those Group IV 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 IV 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, (vii) 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 IV Vehicles to become
Casualties), (viii) the amount of Disposition Proceeds in respect of
Group IV Vehicles sold during the Related Month, (ix) the Repurchase
Prices received during the Related Month and any Guaranteed Payments
received pursuant to a Repurchase Program during the Related Month, (x)
the aggregate Depreciation Charges for all Vehicles
47
continuing in the possession of the Lessees, (xi) the total amount of
Monthly Base Rent, Monthly Variable Rent, Monthly Finance Rent,
Additional Base Rent, Monthly Supplemental Payments and Termination
Payments being paid hereunder on such date, (xii) information with
respect to each Lessee necessary for the Servicer to compute the
Aggregate Group IV Non-Repurchase Asset Amount, the Group IV
Non-Repurchase Fleet Market Value, compute the Aggregate Group IV Type
II Repurchase Asset Amount, the Group IV Type II Repurchase Fleet
Market Value, and the Aggregate Group IV Type I Repurchase Asset
Amount, each with respect to each Series of Notes included in Group IV
as of the end of the Related Month, (xi) any other charges owing from,
and credits due to, the Lessee submitting such Statement under this
Agreement, (xii) the percentages calculated pursuant to Sections
2.5(a)(i) through (iii) as of the last day of the Related Month, and
(xiii) 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) Group IV Type II 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 September 30, 2002,
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 rating any Group IV Series of Notes, to the Required
Beneficiaries with respect to the outstanding Series of Group IV Notes)
furnish a report (the "Group IV Type II Repurchase Report") to the
Lessor, the Trustee and any Rating Agencies then rating any Group IV
Series of Notes (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 IV Type II Repurchase Vehicles (other
than Casualties) sold or otherwise disposed of outside of the
applicable Repurchase Program 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 Indenture,
(ii) the calculation of the Measurement Month Average for each
Measurement Month if applicable to any outstanding Group IV Series of
Notes 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 Indenture and (iii) the
calculation of the Net Book Value of all Group IV Type II Repurchase
Vehicles and the Group IV Type II 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, and that on the basis of such comparison such accountants are
of the opinion that such amounts are in agreement, except for such
exceptions as they believe to be immaterial and such other exceptions
as shall be set forth in such report or (B) in such other form as each
Rating Agency then rating any Group IV Series of Notes
48
or, if no Rating Agency is then currently rating any Group IV Series of
Notes, the Required Beneficiaries with respect to the outstanding
Series of Group IV Notes, shall have expressly agreed to accept;
(vi) On the 25th of each month, a data file containing the
following information for each Vehicle leased hereunder the Group IV
Lease: (i) VIN, (ii) the applicable manufacturer's or dealer's
"In-Service Date" or date on which depreciation begins for purposes of
calculating the price at which the manufacturer or dealer will
repurchase the vehicle, (iii) the Vehicle Lease Commencement Date, (iv)
the state in which such Vehicle is registered, (v) Manufacturer, (vi)
model year, (vii) delivery date, (viii) model name, (ix) titleholder,
(x) lienholder, (xi) Capitalized Cost, (xii) Net Book Value as of such
date, (xiii) mileage as of such date, (xiv) Repurchase Program, if any,
(xv) Repurchase or Non-Repurchase, (xvi) finance source and (xvii)
depreciation rate;
(vii) 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 IV Series of Notes), a report of any lawsuits
filed against the Lessor naming the Lessor as defendant in such action;
(viii) 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 IV Series of Notes), notice of any final judgment
rendered against the Lessor; and
(ix) Other. Promptly, from time to time, such other
information, documents, or reports respecting the Group IV 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.
(b) Budget shall furnish, or cause to be furnished to the Series
2002-1 Noteholders: (i) cash flow and any other financial projections or
information (as specifically agreed to by Budget and the Agent) as and when such
projections are prepared and are available or when such other information is
available; and (ii) as and when delivered to the Agent and the Lenders under the
Credit Agreement (as such terms are defined therein), those financial
statements, notices, projections and other information set forth in paragraphs
(a), (b), (c) and (d) of Annex E to the Credit Agreement.
29.6 Taxes and Liabilities. Except to the extent excused by the
Bankruptcy Code or an order of the Bankruptcy Court, 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 IV Vehicles) or 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 IV Vehicles leased under this
49
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. Except to the extent excused by the
Bankruptcy Code or an order of the Bankruptcy Court, 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 August 6, 2002, 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 IV 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 IV Vehicle pursuant to the terms of the Base Indenture.
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, 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
50
(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 IV Vehicle leased hereunder now or hereafter existing or acquired, except
Liens in favor of the Lessor or the Trustee or the Secured Parties, subordinate
Liens that may have been granted to debtor-in-possession lenders pursuant to an
order of the Bankruptcy Court entered on or prior to the date of this Lease 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 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 IV Vehicles
to be used in any manner that would (i) make any Group IV 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 IV Repurchase Vehicles as, Group
IV Non-Repurchase Vehicles pursuant to Section 14(a) hereof, or (ii) subject
Group IV Vehicles to confiscation.
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 Series of Notes (whether in Group IV or
otherwise), 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
51
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 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
52
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:
TRUSTEE: Deutsche Bank Trust Company Americas
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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.
53
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 2002-1 Note as the first Group IV
Series of Notes issued in connection with this Second Amended and Restated
Master Motor Vehicle Lease Agreement - Group IV.
54
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:
-----------------------------------------
Name:
Title:
LESSEES:
BUDGET RENT-A-CAR SYSTEMS, INC.
NYRAC, INC.
By:
-----------------------------------------
Name:
Title:
GUARANTOR:
BUDGET GROUP, INC.
By:
-----------------------------------------
Name:
Title:
RECEIVED THIS AUGUST __, 2002
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee
By:
------------------------------
Name:
Title:
ANNEX A
ANNEX
TO THE
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT GROUP IV
Dated as of August 6, 2002
among
TEAM FLEET FINANCING CORPORATION,
as Lessor
BUDGET GROUP, INC.,
as Guarantor
and
BUDGET RENT A CAR SYSTEMS, INC.
and those Subsidiaries and Affiliates of Budget Group, Inc.
named on Schedule 1 as Lessees
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 IV 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 IV 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
twenty-four (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 IV Vehicle not previously disposed of, the applicable Lessee shall, (a)
on behalf of the Lessor, promptly dispose of such Group IV 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 IV 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. Lessee'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 applicable Net
Book Value or (b) the Fair Market Value of the Group IV Vehicle (such greater
amount, the "Vehicle Purchase Price", with respect to Group IV Vehicles), in
which event such Lessee will pay the Vehicle Purchase Price to the Lessor on or
before the Due Date next succeeding such purchase by the 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 IV Vehicle or Manufacturer Receivable, as applicable, to be
transferred to the applicable Lessee, and the Lien of the Trustee on such Group
IV 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 IV Repurchase Vehicle (other than any such Group IV
Repurchase Vehicle that has been redesignated as a Group IV Non-Repurchase
Vehicle pursuant to Section 14 at the Lease or, in the case of a Group IV Type
II Repurchase Vehicle, is otherwise disposed of in accordance with Section 3.2
of the Lease) to the related Manufacturer (a) not prior to the end of the Type I
Minimum Term or Type II Minimum Term, as applicable, for such Vehicle, and (b)
not later than the end of the Type I Maximum Term or Type II Maximum Term, as
applicable, for such Vehicle; provided, however, if for any reason, a Lessee
fails to deliver such a Group IV 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 Type I Minimum Term of Type II Minimum Term, as applicable, and the
expiration of the Type I Maximum Term or Type II Maximum Term, as applicable,
such Lessee shall be obligated to purchase such Group IV Repurchase Vehicle as
provided in Section 12 of the Agreement, redesignate such Group IV Vehicle as a
Group IV Non-Repurchase Vehicle in accordance with Section 14 of the Lease or,
in the case of a Group IV Type II Repurchase Vehicle, dispose of such Group IV
Type II Repurchase Vehicle promptly and in a commercially reasonable manner so
as to maximize proceeds from the disposition of such Vehicle. 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 IV Repurchase Vehicles returned
before the expiration of the Minimum Term, regardless of actual usage, unless
such a Group IV 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 IV 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 (a) each Group IV Type II Repurchase Vehicle in the manner
most likely to maximize proceeds from such disposition by either (x) using its
commercially reasonable efforts to return each Group IV Type II Repurchase
Vehicle to the related Manufacturer not prior to
Annex A
2
the end of the Type II Minimum Term for such Vehicle, or (y) using its
commercially reasonable efforts to otherwise dispose of each Group IV Type II
Repurchase Vehicle in a commercially reasonable manner consistent with industry
practice and applicable requirements of law, in either case (x) or (y) prior to
the expiration of the applicable Type II Maximum Term for such Group IV Type II
Repurchase Vehicle and (b) each Group IV Non-Repurchase Vehicle (x) 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 (y) prior to the expiration of the Non-Repurchase Maximum Term
for such Group IV Non-Repurchase Vehicle. Each Lessee shall use commercially
reasonable efforts to cause all proceeds from the disposition of Group IV
Vehicles pursuant to this Section to be paid directly to the Collection Account
for immediate deposit into the Group IV 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 for immediate deposit into the Group IV 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 prior to the expiration
of the Type I Maximum Term, Type II Maximum Term or Non-Repurchase Maximum Term,
as applicable, for any Group IV Vehicle leased under this Annex A, to require
that the Lessee thereof, and the Lessee shall have the obligation to (a) deliver
such Group IV Vehicle to the Manufacturer for repurchase (if such Group IV
Vehicle is a Group IV Repurchase Vehicle) or (b) exercise commercially
reasonable efforts to arrange for the sale of such Vehicle to a third party for
price (i) greater than the Net Book Value thereof (if such Group IV Vehicle is a
Group IV Type I Repurchase Vehicle), (ii) at least equal to the Type II
Repurchase Vehicle Value (if such Group IV Vehicle is a Group IV Type II
Repurchase Vehicle) or (iii) at least equal to the Non-Repurchase Vehicle Value
thereof (if such Group IV Vehicle is a Group IV Non-Repurchase Vehicle). If a
sale of the Vehicle to a third party is arranged by the Lessee prior to the
expiration of such Type I Maximum Term, Type II Maximum Term or Non-Repurchase
Maximum Term, as applicable, in accordance with the foregoing, then the Lessee
shall deliver the Group IV Vehicle to the purchaser thereof, the Lien of the
Trustee on the Certificate of Title of such Group IV 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 IV Type I Repurchase Vehicle on or before the 30th day prior to the
expiration of such Type I Maximum Term or a Group IV Type II Repurchase Vehicle
on or before the 30th day prior to the expiration of such Maximum Type II Term,
then the Lessee shall cease attempting to arrange for such a sale and shall
return such Group IV Repurchase Vehicle to the applicable Manufacturer, purchase
such Group IV Vehicle as herein provided or, in the case of a Group IV Type II
Repurchase Vehicle and if applicable, arrange for the sale of such Group IV Type
II Repurchase Vehicle at auction with commercially reasonable efforts to
maximize the sale price. If the Lessee is unable to arrange for a sale of a
Group IV 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 IV Vehicle at auction with commercially
reasonable efforts to maximize the
Annex A
3
sale price. In no event may any Group IV Type I 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 IV Type I Repurchase 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 IV Type II Repurchase Vehicles and Group IV
Non-Repurchase Vehicles leased hereunder, with
respect to each Due Date shall equal the amount, if
any, by which (a) 100% of the current aggregate Net
Book Value of such Group IV Type II Repurchase
Vehicles or Group IV Non-Repurchase Vehicles owned by
the Lessor exceeds (b) the three (3) month rolling
average of the Fair Market Value of such Group IV
Type II Repurchase Vehicles or Group IV
Non-Repurchase Vehicles, as applicable, 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 IV 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 sum of (a) an amount equal to the Net
Book Value of such Group IV Vehicle, with respect to
each Group IV Type I Repurchase Vehicle, the Type II
Repurchase Vehicle Value of such Vehicle, with
respect to each Group IV Type II Repurchase Vehicle,
or the Non-Repurchase Vehicle Value of such Vehicle,
with respect to each Group IV 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 IV Series of Notes for the
Related Month less (y) any accrued earnings on
Permitted Investments in the Group IV 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 IV
Annex A
4
Vehicle, with respect to each Group IV Type I
Repurchase Vehicle, the Type II Repurchase Vehicle
Value of such Group IV Vehicle, with respect to each
Group IV Type II Repurchase Vehicle or the
Non-Repurchase Vehicle Value of such Group IV
Vehicle, with respect to each Group IV Non-Repurchase
Vehicle, and the denominator of which is the sum of
the Net Book Values of all Group IV Type I Repurchase
Vehicles, Type II Repurchase Vehicle Values of all
Group IV Type II Repurchase Vehicles and
Non-Repurchase Vehicle Values of all Group IV
Non-Repurchase Vehicles. In the event the Vehicle
Lease Commencement Date occurs with respect to such
Group IV Vehicle on a day other than the last day of
a Related Month, the Monthly Variable Rent for such
Group IV Vehicle for such initial month shall be
equal to the product of (a) the Monthly Variable Rent
otherwise payable with respect to such Group IV
Vehicle, multiplied by (b) a fraction the numerator
of which is 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 and the denominator of which is
360. 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 for such final month
shall be equal to the product of (a) the Monthly
Variable Rent otherwise payable with respect to such
Group IV Vehicle for the Related Month, multiplied by
(b) a fraction the numerator of which is 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 and
the denominator of which is 360.
"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 IV Series of Notes, is an interest rate equal
to (i) the amount of interest accrued during such
period with respect to all Group IV Series of Notes
divided by (ii) the average daily Invested Amounts of
all such Group IV 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 IV Vehicle leased
hereunder by such ▇▇▇▇▇▇;
(ii) Monthly Variable Rent. Each Lessee shall pay
to the Lessor all Monthly Variable Rent that has accrued
during the Related
Annex A
5
Month with respect to each Group IV Vehicle leased hereunder
by such ▇▇▇▇▇▇; and
(iii) Additional Base Rent. Each Lessee shall pay
to the Lessor such ▇▇▇▇▇▇'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 IV Type II
Repurchase Vehicles and Group IV Non-Repurchase Vehicles
leased hereunder by such ▇▇▇▇▇▇.
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 IV 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 IV 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 IV Vehicles or any part
thereof; (iii) any restriction, prevention or curtailment of or interference
with any use of the Group IV Vehicles or any part thereof; (iv) any defect in or
any Lien on title to the Group IV 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 IV 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
Annex A
6
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 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 IV Vehicles leased by it free of all Liens arising during the Term. Upon
the Vehicle Lease Termination Date for each Group IV 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 IV
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 ▇▇▇▇▇▇. 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 IV 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 IV
Vehicles without disturbing the ordinary conduct of the Lessee's business. Upon
the request of the Lessor or the Trustee, from time to time, each Lessee will
make reasonable efforts to confirm to the Lessor and the Trustee the location,
mileage and condition of each Group IV 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 IV Vehicles at the
location where such Group IV 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 IV Vehicles available to
the Lessor or the Trustee for inspection at the location where the Lessee's
records are normally domiciled.
13. Certain Risks of Loss Borne by ▇▇▇▇▇▇▇. Upon delivery of a
Group IV 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 IV Vehicle, including personal injury or
death and property damage, arising with respect to such Group IV Vehicle due to
the manufacture, purchase, acceptance, rejection, delivery, leasing, subleasing,
possession, use, inspection, registration, operation, condition, maintenance,
repair or storage of such Group IV Vehicle, howsoever arising.
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 IV Vehicles whatsoever other
than the rights of possession and use of such Group IV Vehicles as provided by
this Agreement. In addition, each Lessee, by its execution hereof, acknowledges
and agrees that (i) the
Annex A
7
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
8
ANNEX B
ANNEX
TO THE
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT GROUP IV
Dated as of August 6, 2002
among
TEAM FLEET FINANCING CORPORATION,
as Lessor
BUDGET GROUP, INC.,
as Guarantor
and
BUDGET RENT A CAR SYSTEMS, INC.
and those Subsidiaries and Affiliates of Budget Group, Inc.
named on Schedule 1 as Lessees
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 IV 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 sixty (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 IV
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:
"Additional Base Rent" with respect to the
Group IV Type II Repurchase Vehicles and Group IV
Non-Repurchase Vehicles leased hereunder, with
respect to each Due Date shall equal the amount, if
any, by which (a) 100% of the current aggregate Net
Book Value of such Group IV Type II Repurchase
Vehicles or Group IV Non-Repurchase Vehicles financed
under this Financing Lease exceeds (b) the three (3)
month rolling average of the Fair Market Value of
such Group IV Type II Repurchase Vehicles or Group IV
Non-Repurchase Vehicles, as applicable, 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 IV Vehicle during
the Related Month.
"Monthly Finance Rent" with respect to each
Due Date and each Group IV Vehicle subject to this
Agreement shall equal the sum of (a) an amount equal
to the Net Book Value of such Group IV Vehicle, with
respect to each Group IV Type I Repurchase Vehicle,
the Type II Repurchase Vehicle Value of such Vehicle,
with respect to each Group IV Type II Repurchase
Vehicle or the Non-Repurchase Vehicle Value of such
Group IV Vehicle with respect to each Group IV
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 IV Series
of Notes for the Related Month less (y) any accrued
earnings on Permitted Investments in the Group IV
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 IV Vehicle, with respect to each Group IV Type
II Repurchase Vehicle, the Type II Repurchase Vehicle
Value of such Group IV Vehicle, with respect to each
Group IV Type II Repurchase Vehicle or the Group IV
Non-Repurchase Vehicle Value of such Group IV
Vehicle, with respect to each Group IV Non-Repurchase
Vehicle and the denominator of which is the sum of
the Net Book Values of all Group IV Type I Repurchase
Vehicles, Type II Repurchase Vehicle Values of all
Group IV Type II Repurchase Vehicles and
Non-Repurchase Vehicle Values of all Group IV
Non-Repurchase Vehicles. In the event the Vehicle
Lease Commencement Date occurs with respect to such
Group IV Vehicle on a day other than the last day of
a Related Month, the Monthly Finance Rent for such
Group IV
Annex B
2
Vehicle for such initial month shall be equal to the
product of (a) the Monthly Finance Rent otherwise
payable with respect to such Group IV Vehicle,
multiplied by (b) a fraction the numerator of which
is 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 and the denominator of which is 30. In
the event the Vehicle Lease Expiration Date occurs
with respect to such Group IV Vehicle on a day other
than the last day of the Related Month, the Monthly
Finance Rent for such Group IV Vehicle for such final
month shall be equal to the product of (a) the
Monthly Finance Rent otherwise payable with respect
to such Group IV Vehicle for the Related Month,
multiplied by (b) a fraction the numerator of which
is 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 and the denominator of which is 30.
"Monthly Supplemental Payment" with respect
to each Due Date and all Group IV 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 during the Related Month or
(z) the 60th 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
Annex B
3
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 during the
Related Month or (z) the 60th 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 (iv) the
aggregate amount of all Auction Receivables financed
under this Finance Lease relating to Non-Repurchase
Vehicles with respect to which (x) the amount thereof
has been paid by the related Auction Dealer during
the Related Month or (y) the 5th 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 and allocated
to the Group IV Series of Notes, 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 IV Repurchase
Vehicle that became a Casualty as a result of such
Group IV Repurchase Vehicle being held beyond the
Maximum Term applicable thereto (other than, in each
case, a Group IV Repurchase Vehicle that has been
redesignated as a Group IV Non-Repurchase Vehicle in
accordance with Section 14 of the Lease), such Group
IV Vehicle will be deemed to have become a Casualty
upon the date the Maximum Term expires.
"Rent", with respect to Financed Vehicles,
means Monthly Base Rent, Monthly Finance Rent,
Monthly Supplemental Rent, Additional Base Rent and
Monthly Supplemental Payments.
"VFR" for any period with respect to any
Group IV Series of Notes, is an interest rate equal
to (i) the amount of interest accrued during such
period with respect to all Group IV Series of Notes
divided by (ii) the average daily Invested Amounts of
all such Group IV 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 IV Vehicle leased
hereunder by such ▇▇▇▇▇▇;
Annex B
4
(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 IV Vehicle leased
hereunder by such ▇▇▇▇▇▇;
(iii) Additional Base Rent. Each Lessee shall pay
to the Lessor such ▇▇▇▇▇▇'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 IV Type II
Repurchase Vehicles and Group IV Non-Repurchase Vehicles
leased hereunder by such ▇▇▇▇▇▇; 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 IV 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.
7. Risk of Loss Borne by ▇▇▇▇▇▇▇. 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 IV
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 IV 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 IV 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 IV Vehicle pursuant to this Paragraph 8) and,
prior to the expiration of the Type I Maximum Term, Type II Maximum Term or
Non-Repurchase Maximum Term, applicable thereto, the Lessee thereof shall
purchase such Texas Vehicle or Hawaii Vehicle (including any such Group IV
Vehicle which has become a Casualty) at a
Annex B
5
purchase price equal to the Net Book Value of such Group IV 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 IV 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 IV 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 Distribution 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 relating
thereto) is paid by the Lessee to the Trustee.
* * *
Annex B
6
Schedule I
LESSEES AS OF SERIES 2002-1 CLOSING DATE
1. BUDGET RENT-A-CAR SYSTEMS, INC.
2. NYRAC, INC.
Schedule II
NOTICE ADDRESSES
BUDGET RENT-A-CAR SYSTEMS, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
NYRAC, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Schedule 28.8
BUSINESS LOCATIONS
BUDGET RENT-A-CAR SYSTEMS, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
NYRAC, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
BUDGET GROUP, INC.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
ATTACHMENT A-1
TO
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP IV
INFORMATION ON REFINANCED VEHICLES AND ELIGIBLE RECEIVABLES
Refinanced Vehicles
1. Vehicle Model
2. Vehicle Identification Number (last eight digits) (VIN)
3. Vehicle Lease Commencement Date
4. Capitalized Cost
5. Monthly Base Rent
6. State of Title and Registration
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)
The [Lessee]/[Servicer] hereby represents and warrants that: (a) all
the conditions precedent under the Group IV Master Lease to the leasing of such
Refinanced Vehicles and financing of such Eligible Receivables under the Group
IV Master Lease have been satisfied, (b) each such receivable is an Eligible
Receivable, and (c) the Lien of the Trustee 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.
ATTACHMENT A-2
TO
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP IV
GROUP IV 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. State of Title and Registration
ATTACHMENT B
TO
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP IV
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 Deutsche Bank Trust
Company Americas (formerly known as 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:
B-2
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-3
ATTACHMENT C
TO
SECOND AMENDED AND RESTATED
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP IV
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 Second
Amended and Restated Master Motor Vehicle Lease Agreement Group IV, dated as of
August 6, 2002 (as amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof, the "Lease"), among TFFC, Budget Rent A
Car 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:
C-1
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 August 6, 2002, 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.
C-2
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:
Consented to by:
BUDGET GROUP, INC.
By:
---------------------------------
Name:
Title:
C-3
ATTACHMENT D
TO
MASTER MOTOR VEHICLE LEASE AGREEMENT
GROUP IV
FORM OF BILL 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 IV
Vehicles listed and described in Schedule I 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 August 6, 2002 among the Buyer, Budget Group, Inc. ("Budget"),
a Delaware corporation, as Servicer and Budget Interestholder, and Deutsche Bank
Trust Company Americas, formerly know as 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.
D-1
IN WITNESS WHEREOF, the Seller has executed this Bill of Sale as of
_______________, 20___.
[SELLER]
By:
-----------------------------
Name:
Title:
D-2
TABLE OF CONTENTS
(continued)
PAGE
SCHEDULE 1
TO BILL OF SALE
VEHICLES
VIN NET BOOK
VALUE
--------------- ------------------
Total: $
==================