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EXHIBIT 4.3
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees and Servicers hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
AS SET FORTH IN SECTION 21 HEREOF, THE LESSOR HAS ASSIGNED TO THE TRUSTEE (AS
DEFINED HEREIN) ALL OF THE LESSOR'S 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
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TABLE OF CONTENTS
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SECTION 1. CERTAIN DEFINITIONS.............................................................................2
Section 1.1. Certain Definitions...............................................................2
Section 1.2. Accounting and Financial Determinations...........................................2
Section 1.3. Cross References; Headings........................................................2
Section 1.4. Interpretation....................................................................3
SECTION 2. GENERAL AGREEMENT...............................................................................3
Section 2.1. Leasing of Vehicles...............................................................4
Section 2.2. Right of Lessee to Act as Lessor's Agent; Titling of
Series 1997 Vehicles in the Name of Nominees....................................................6
Section 2.3. Payment of Purchase Price by Lessor, Certain Additional
Payments to the Servicer........................................................................6
Section 2.4. Non-liability of Lessor...........................................................7
SECTION 3. TERM ..........................................................................................8
Section 3.1. Vehicle Lease Commencement Date...................................................8
Section 3.2. Lease Commencement Date...........................................................9
SECTION 4. CONDITIONS PRECEDENT............................................................................9
Section 4.1. Conditions to Effectiveness of this Lease.........................................9
Section 4.2. Conditions to Each Lease of Vehicles.............................................11
Section 4.3. Additional Conditions to Leases of
Refinanced Vehicles............................................................................13
SECTION 5. RENT AND CHARGES...............................................................................14
Section 5.1. Payment of Rent..................................................................14
Section 5.2. Payment of Monthly Supplemental Payments and
Additional Synthetic Lease Payments............................................................14
Section 5.3. Payment of Termination Payments and Casualty
Payments.......................................................................................14
Section 5.4. Late Payment.....................................................................14
Section 5.5. Making of Payments...............................................................14
SECTION 6. RESERVED.......................................................................................15
SECTION 7. CASUALTY AND INELIGIBLE VEHICLES...............................................................15
SECTION 8. VEHICLE USE....................................................................................15
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TABLE OF CONTENTS
(continued)
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SECTION 9. REGISTRATION; LICENSE; TRAFFIC SUMMONSES;
PENALTIES AND FINES............................................................................16
SECTION 10. MAINTENANCE AND REPAIRS........................................................................17
SECTION 11. MANUFACTURER WARRANTIES........................................................................18
SECTION 12. VEHICLE RETURN GUIDELINES......................................................................18
Section 12.1. Vehicle Turn-in Condition.......................................................18
Section 12.2. Disposition Procedure...........................................................18
Section 12.3. Termination Payments............................................................18
SECTION 13. [RESERVED].....................................................................................19
SECTION 14. REDESIGNATION OF VEHICLES......................................................................19
SECTION 15. GENERAL INDEMNITY AND PAYMENT OF EXPENSES......................................................20
Section 15.1. Indemnity and Payment of Expenses by the Lessees................................20
Section 15.2. Indemnification of the Trustee..................................................22
Section 15.3. Reimbursement Obligation by the Lessees.........................................22
Section 15.4. Notice to Lessee of Claims......................................................22
Section 15.5. Defense of Claims...............................................................23
SECTION 16. SUCCESSORS AND ASSIGNS; ASSIGNMENT.............................................................23
SECTION 17. DEFAULT AND REMEDIES THEREFOR..................................................................24
Section 17.1. Events of Default...............................................................24
Section 17.2. Effect of Lease Event of Default; Series 1997-1 Limited
Liquidation Event of Default or Liquidation Event of Default25...................................
Section 17.3. Rights of Lessor and Trustee Upon Lease Event of
Default, Liquidation Event of Default or Series 1997 Limited
Liquidation Event of Default...................................................................26
Section 17.4. Measure of Damages..............................................................29
Section 17.5. Application of Proceeds.........................................................29
SECTION 18. MANUFACTURER EVENTS OF DEFAULT; LESSEE PARTIAL
WIND-DOWN EVENTS...............................................................................29
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE.........................................................30
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(continued)
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SECTION 20. SURVIVAL.......................................................................................30
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL
AGENT AND TRUSTEE..............................................................................30
SECTION 22. MODIFICATION AND SEVERABILITY..................................................................32
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES.........................................................33
Section 23.1. Organization; Power; Qualification..............................................33
Section 23.2. Authorization; Enforceability...................................................33
Section 23.3. Compliance......................................................................33
Section 23.4. Financial Information; Financial Condition......................................34
Section 23.5. Litigation......................................................................34
Section 23.6. Liens...........................................................................34
Section 23.7. Employee Benefit Plans..........................................................34
Section 23.8. Securities Laws.................................................................35
Section 23.9. Regulations G, T, U and X.......................................................35
Section 23.10. Business Locations; Trade Names................................................35
Section 23.11. Taxes..........................................................................35
Section 23.12. Governmental Authorizations....................................................35
Section 23.13. Absence of Default.............................................................35
Section 23.14. Compliance with Requirements of Law............................................36
Section 23.15. Eligible Vehicles; Fleet Sharing Parties.......................................36
Section 23.16. Title to Assets................................................................36
Section 23.17. Accuracy of Information........................................................36
Section 23.18. Environmental Matters..........................................................36
Section 23.19. Burdensome Provisions..........................................................37
Section 23.20. Solvency.......................................................................37
Section 23.21. Ownership......................................................................37
Section 23.22. Necessary Actions..............................................................37
Section 23.23. Supplemental Documents True and Correct........................................37
Section 23.24. Initial Vehicles...............................................................38
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS..................................................................38
Section 24.1. Corporate Existence; Foreign Qualification......................................38
Section 24.2. Books, Records and Inspections..................................................38
Section 24.3. Maintenance of Properties.......................................................39
Section 24.4. Accounting Methods; Financial Records...........................................39
Section 24.5. Insurance.......................................................................39
Section 24.6. Manufacturer Programs...........................................................40
Section 24.7. Reporting Requirements..........................................................40
Section 24.8. Taxes and Liabilities...........................................................44
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(continued)
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Section 24.9. Maintenance of the Vehicles....................................................44
Section 24.10. Maintenance of Separate Existence..............................................44
Section 24.11. Maintenance of Enhancement.....................................................44
Section 24.12. Repurchase Payments; Sales Proceeds............................................44
Section 24.13. Certificates of Title: Verification of Titles..................................45
Section 24.14. Master Collateral Agency Agreement.............................................45
Section 24.15. Compliance with Laws...........................................................46
Section 24.16. Delivery of Information........................................................46
Section 24.17. Restrictions...................................................................46
Section 24.18. Deliveries: Further Assurances.................................................46
Section 24.19. Additional Actions.............................................................46
Section 24.20. Fleet Sharing Agreements.......................................................47
Section 24.21. Minimum Depreciation Rate......................................................47
SECTION 25. CERTAIN NEGATIVE COVENANTS.....................................................................47
Section 25.1. Mergers, Consolidations.........................................................47
Section 25.2. Regulations G, T, U and X.......................................................47
Section 25.3. Liens...........................................................................48
Section 25.4. Use of Vehicles.................................................................48
Section 25.5. Change of Location or Name......................................................48
SECTION 26. SERVICING COMPENSATION; DELEGATION OF SERVICING
DUTIES.........................................................................................48
Section 26.1...................................................................................48
Section 26.2...................................................................................48
Section 26.3...................................................................................49
SECTION 27. RELEASE OF COLLATERAL..........................................................................49
SECTION 28. GUARANTY.......................................................................................50
Section 28.1. Guaranty........................................................................50
Section 28.2. Scope of Guarantor's Liability..................................................50
Section 28.3. Lessor's Right to Amend this Lease..............................................51
Section 28.4. Waiver of Certain Rights by Guarantor...........................................51
Section 28.5. Lessees' Obligations to Guarantor and Guarantor's
Obligations to Lessees Subordinated............................................................52
Section 28.6. Guarantor to Pay Lessor's Expenses..............................................53
Section 28.7. Reinstatement...................................................................53
Section 28.8. Pari Passu Indebtedness.........................................................54
Section 28.9. Third-Party Beneficiaries.......................................................54
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(continued)
SECTION 29. ADDITIONAL LESSEES.............................................................................54
Section 29.1. Additional Affiliate and Subsidiary Lessees....................................54
SECTION 30. BANKRUPTCY PETITION AGAINST LESSOR.............................................................55
SECTION 31. FORUM SELECTION AND CONSENT TO JURISDICTION....................................................56
SECTION 32. GOVERNING LAW..................................................................................56
SECTION 33. JURY TRIAL.....................................................................................56
SECTION 34. NOTICES........................................................................................57
SECTION 35. HEADINGS.......................................................................................57
SECTION 36. EXECUTION IN COUNTERPARTS......................................................................57
EXHIBITS
ANNEX A - Operating Lease Annex
ANNEX B - Financing Lease Annex
ANNEX C - Synthetic Lease Annex
SCHEDULE 23.10 - Business Locations
ATTACHMENT A-1 -Information on Refinanced Vehicles and Eligible Receivables
ATTACHMENT A-2 -Vehicle Order
ATTACHMENT B -Form of Power of Attorney
ATTACHMENT C -Form of Certification of Trade or Business Use
ATTACHMENT D -Form of Affiliate Joinder in Lease
EXHIBIT A - Form of Monthly Certificate
EXHIBIT B - Form of Series 1997-1 Lease Payment Deficit Notice
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COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART
CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE TRUSTEE ON THE
SIGNATURE PAGE THEREOF.
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MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
This Master Motor Vehicle Lease and Servicing Agreement (the "Base
Lease" and, as supplemented by the Lease Annexes, this "Lease" or the "Series
1997 Lease"), dated as of October 29, 1997, is by and among NATIONAL CAR RENTAL
FINANCING LIMITED PARTNERSHIP, a special purpose Delaware limited partnership
(the "Lessor" or "NFLP"), NATIONAL CAR RENTAL SYSTEM, INC., a Delaware
corporation ("National"), as a lessee and a servicer, ALAMO RENT-A-CAR, INC., a
Florida corporation ("Alamo"), as a lessee and a servicer, VALUE RENT-A-CAR,
INC., a Florida corporation ("Value"), as a lessee and a servicer, SPIRIT
RENT-A-CAR, INC., an Ohio corporation ("Spirit"), as a lessee and a servicer,
and those subsidiaries of Republic Industries, Inc. from time to time becoming
Lessees hereunder pursuant to Section 29 hereof (each, an "Additional Lessee"),
as a lessee and a servicer (each of National, Alamo, Value and Spirit, and each
of the Additional Lessees, in their respective capacities as lessees, a "Lessee"
and, collectively, the "Lessees", and, in their respective capacities as
servicers, a "Servicer" and, collectively, the "Servicers") and REPUBLIC
INDUSTRIES, INC. a Delaware corporation ("Republic"), as master servicer (in
such capacity, the "Master Servicer") and as guarantor (in such capacity, the
"Guarantor").
W I T N E S S E T H:
WHEREAS, the Lessor (such capitalized term, together with each other
capitalized term used herein, shall have the meaning assigned thereto in Section
1) intends to refinance the Refinanced Vehicles and certain Eligible Receivables
and to purchase, and finance and refinance the purchase of, additional Eligible
Vehicles and Eligible Receivables with the proceeds obtained by the issuance of
its Series 1997-1 Notes, Series 1997-2 Notes, Series 1997-3 Notes and Series
1997-4 Notes (collectively, the "Series 1997 Variable Funding Notes") (and, if
any, other Shared Collateral Series Notes) issued pursuant to the Indenture and
the borrowing of Advances from time to time and with certain other funds; and
WHEREAS, the Lessor desires to lease to the Lessees and the Lessees
desire to lease from the Lessor, Vehicles for use in the domestic daily rental
car operations of the Lessees and their Fleet Sharing Parties;
WHEREAS, the Lessees desire to refinance the Refinanced Vehicles and
certain Eligible Receivables and finance and refinance the acquisition of the
Financed Vehicles and Synthetic Lease Vehicles and the Lessor desires to
facilitate such financing and refinancing.
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:
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SECTION 1. CERTAIN DEFINITIONS.
Section 1.1. Certain Definitions. As used in this Lease and unless the
context requires a different meaning, capitalized terms not otherwise defined
herein or in the Annexes hereto shall have the meanings assigned to such terms
in the Definitions List, attached as Schedule 1 to the Base Indenture, dated as
of April 30, 1996, as amended by the Supplement and Amendment to Base Indenture,
dated as of December 20, 1996, and as such agreement may be further amended,
supplemented, restated or otherwise modified from time to time in accordance
with its terms, the "Base Indenture"), between NFLP and The Bank of New York, as
trustee, as in effect on the date hereof and as such Schedule 1 has been, for
purposes of the Series 1997 Variable Funding Notes, supplemented by the
applicable Series 1997 Variable Funding Supplements and may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms of the Base Indenture (the "Definitions List").
Section 1.2. Accounting and Financial Determinations. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be made,
for the purpose of this Lease, such determination or calculation shall, to the
extent applicable, be made in accordance with GAAP applied on a Consistent Basis
except insofar as:
(a) a Lessee or the Guarantor shall have elected (with the
concurrence of its independent public accountants and upon prior
written notification to the Lessor and the Trustee) to adopt more
recently promulgated GAAP (which election shall continue to be
effective for subsequent years); and
(b) the Trustee and the Required VFN Noteholders shall have
consented to such election.
Upon a change in GAAP which becomes effective after the VFN Closing
Date and which would have a material effect on a Lessee's or the Guarantor's
consolidated financial statements and the assets and liabilities reflected
therein or otherwise affect the application or effect of the terms of this
Lease, such change shall not be given effect for purposes hereof until sixty
(60) days from the otherwise effective date of such change. Prior to such
effectiveness, the Trustee, the Lessor, the Guarantor and the Lessees shall in
good faith negotiate to amend the pertinent provisions of this Lease to account
for such change to the extent appropriate to effect the substance thereof as of
the VFN Closing Date. If such an amendment is not entered into with respect to
any such change, such change shall not be given effect for purposes hereof.
Section 1.3. Cross References; Headings. The words "hereof", "herein"
and "hereunder" and words of a similar import when used in this Lease shall
refer to this Lease as a whole and not to any particular provision of this
Lease. Annex, Section, Schedule and Exhibit references contained in this Lease
are references to Annexes, Sections, Schedules and Exhibits in
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or to this Lease unless otherwise specified. Any reference in any Section or
definition to any clause is, unless otherwise specified, to such clause of such
Section or definition. The various headings in this Lease are inserted for
convenience only and shall not affect the meaning or interpretation of this
Lease or any provision hereof.
Section 1.4. Interpretation. In this Lease, unless the context
otherwise requires:
(a) the singular includes the plural and vice versa;
(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Lease, and reference to any Person in a particular
capacity only refers to such Person in such capacity;
(c) reference to any gender includes the other gender;
(d) reference to any Requirement of Law means such Requirement
of Law as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time;
(e) "including" (and, with correlative meaning, "include")
means including without limiting the generality of any description
preceding such term;
(f) "or" is not exclusive;
(g) provisions apply to successive events and transactions;
(h) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(i) reference to a "Vehicle" or "Vehicles" means a Series 1997
Vehicle or Series 1997 Vehicles, respectively.
SECTION 2. GENERAL AGREEMENT. (a) As specified in the Lease Annexes,
the Lessees and the Lessor intend that this Lease be (i) an operating lease with
respect to the Acquired Vehicles, (ii) a financing arrangement with respect to
the Financed Vehicles and (iii) a lease for accounting purposes and a financing
arrangement for tax purposes with respect to the Synthetic Lease Vehicles.
(b) If, notwithstanding the intent of the parties to this Lease, this
Lease is deemed by any court, tribunal, arbitrator or other adjudicative
authority in any proceeding (each, a "Court") to constitute a financing
arrangement or otherwise not to constitute a "true lease" with respect to the
Acquired Vehicles, then it is the intention of the parties that this Lease
together with the Master
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Collateral Agency Agreement, as such agreements apply to the Acquired Vehicles,
shall constitute a security agreement under applicable law. It is also the
intention of the parties that this Lease together with the Master Collateral
Agency Agreement, as such agreements apply to the Financed Vehicles and the
Synthetic Lease Vehicles, shall in all events constitute a security
agreement under applicable law. Each Lessee hereby acknowledges that it has
granted to the Master Collateral Agent, pursuant to the Master Collateral Agency
Agreement, for the benefit of the Trustee (on behalf of the Series 1997 Variable
Funding Noteholders) and the Other VFN Beneficiaries a first priority security
interest in all of such Lessee's right, title and interest in and to the Lessee
Grantor Master Collateral (as defined therein) 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 the Lessee to the Lessor and the Trustee, 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 Lease and any other document
made, delivered or given by such Lessee in connection herewith, whether on
account of rent, principal, interest, reimbursement obligations, fees,
indemnities, costs or expenses (including all fees and disbursements of counsel
to the Lessor or the Trustee that are required to be paid by the Lessee pursuant
to the terms hereof).
Section 2.1. Leasing of Vehicles. (a) General. From time to time,
subject to the terms and conditions hereof, the Lessor agrees to lease to each
Lessee and each Lessee agrees to lease from the Lessor the Refinanced Vehicles
and each additional Acquired Vehicle, Financed Vehicle or Synthetic Lease
Vehicle identified in Vehicle Orders (as defined below) produced from time to
time by such Lessee, listing Vehicles ordered by the Lessee from Eligible
Manufacturers, dealers or other sellers, for itself or as agent for the Lessor,
pursuant to the terms of any applicable Manufacturer Programs or otherwise. The
Lessor shall, subject to Section 4 and in compliance with the terms of the
Indenture, make available to the Lessee under this Lease, financing for Financed
Vehicles, Synthetic Lease Vehicles and Eligible Receivables in an aggregate
amount, and Acquired Vehicles for lease to the Lessee hereunder in an aggregate
Net Book Value, which collectively shall not exceed the Maximum Lease
Commitment. Notwithstanding anything to the contrary contained in this Lease,
the Lessor shall lease to the Lessees, and the Lessees shall lease from the
Lessor, only Vehicles that are Eligible Vehicles.
(b) Refinanced Vehicles and Eligible Receivables. On or prior to the
applicable Vehicle Funding Date, each Lessee desiring to refinance Refinanced
Vehicles and Eligible Receivables under this Lease shall prepare, and upon
request of the Lessor, make available to the Lessor, a schedule as set forth in
Attachment A-1 hereto containing information concerning the Refinanced Vehicles
of such Lessee and the Eligible Receivables to be refinanced under this Lease on
the applicable Vehicle Funding Date (each such schedule, a "Refinanced Vehicle
Schedule").
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(c) Program Vehicles. On or prior to the applicable Vehicle Funding
Date, each Lessee desiring to lease Program Vehicles (other than Refinanced
Vehicles) under this Lease shall prepare and, upon request of the Lessor, make
available to the Lessor (i) a summary of each additional Program Vehicle to be
leased hereunder by such Lessee (including, in the case of each such Program
Vehicle subject to GM's "Matrix" Manufacturer Program, the Designated Period for
such Program Vehicle) and the Capitalized Cost thereof, (ii) a schedule
containing the information with respect to the Vehicles included within such
Vehicle Order as is set forth in Attachment A-2 hereto, or in such form as is
otherwise requested by the Lessor (each, a "Vehicle Order") and (iii) the
Manufacturer's invoice. In addition, the applicable Lessee shall provide such
other information regarding such Program Vehicles as the Lessor may reasonably
require from time to time. Each Lessee agrees that any Program Vehicles ordered
by such Lessee on behalf of the Lessor pursuant to this Section 2.1(c) shall be
ordered utilizing the procedures consistent with the applicable Manufacturer
Program, in each case as and to the extent applicable. This Lease, together with
the Manufacturer Programs and any other related documents attached to this Lease
or submitted with a Vehicle Order (collectively, the "Supplemental Documents"),
will constitute the entire agreement regarding the leasing of Program Vehicles
by the Lessor to the Lessees.
(d) Non-Program Vehicles. On or prior to the applicable Vehicle Funding
Date, each Lessee desiring to lease Non-Program Vehicles (other than Refinanced
Vehicles or Auction Acquired Vehicles) under this Lease shall prepare and, upon
request of the Lessor, make available to the Lessor (i) a summary of each
additional Non-Program Vehicle to be leased hereunder by such Lessee and the
Capitalized Cost thereof, (ii) a Vehicle Order for such NonProgram Vehicles and
(iii) an invoice for the Capitalized Cost of such Non-Program Vehicles. In
addition, the applicable Lessee shall provide such other information regarding
such NonProgram Vehicles as the Lessor may reasonably require from time to time.
This Lease, together with any Supplemental Documents related to or submitted
with a Vehicle Order will constitute the entire agreement regarding the leasing
of Non-Program Vehicles by the Lessor to the Lessees.
(e) Auction Acquired Vehicles. Either concurrently with the execution
and delivery of this Lease or after the date of this Lease on or prior to the
applicable Vehicle Funding Date, any Lessee may request that the Lessor
purchase, or finance the Lessee's purchase of, a NonProgram Vehicle from a
licensed independent automobile dealer, through an auction or pursuant to
another vehicle sale (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 Lease (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 Acquired
Vehicles) or the applicable Lessee (in the case of Financed Vehicles and
Synthetic Lease Vehicles), the applicable Lessee shall have obtained the
original Certificate of Title for each
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Auction Acquired Vehicle and shall prepare or obtain and, upon request of the
Lessor, make available to the Lessor, the following:
(i) a Vehicle Order with respect to all Auction Acquired
Vehicles covered by such Auction Sale Transaction; and
(ii) a xxxx of sale or other instrument of transfer
customarily used in the wholesale motor vehicle resale market (each, an
"Auction Xxxx of Sale"), conveying title to the Auction Acquired
Vehicles, and copies of any certificate given by the related auction
house regarding the absence of liens and/or the ownership of each such
Auction Acquired Vehicle.
After any purchase of Auction Acquired Vehicles by the Lessor or a Lessee under
this Section 2.1(e), such Vehicles will be subject to all the terms and
conditions of this Agreement. Promptly following such Auction Sale Transaction,
the applicable Lessee shall complete and deliver an application to retitle such
Auction Acquired Vehicle in the name of the Lessor (in the case of Acquired
Vehicles or Company Vehicles) or such Lessee (in the case of Financed Vehicles
and Synthetic Lease Vehicles) and to have noted thereon the Master Collateral
Agent's security interest in such Auction Acquired Vehicle pursuant to the
Master Collateral Agency Agreement.
Section 2.2. Right of Lessee to Act as Lessor's Agent; Titling of
Series 1997 Vehicles in the Name of Nominees. (a) The Lessor agrees that each
Lessee may act as the Lessor's agent in placing Vehicle Orders on behalf of the
Lessor, conducting pre-delivery inspection, titling and xxxxxxx of Series 1997
Vehicles, filing claims on behalf of the Lessor for damage in transit, and other
delivery claims related to the Vehicles leased by such Lessee hereunder,
facilitating payment for Vehicles leased by such Lessee hereunder and performing
any other duties of the Lessee as a Servicer hereunder; provided, however, that
the Lessor may hold the applicable Lessee liable for losses due to such Lessee's
actions in performing as the Lessor's agent hereunder. In addition, the Lessor
agrees that each Lessee may make arrangements for delivery of Vehicles leased by
such Lessee hereunder to a location selected by the Lessee at the Lessee's
expense to the extent that any such expense has not been included in the
Capitalized Cost of such Vehicle. A Lessee may accept or reject Eligible
Vehicles upon delivery in accordance with the Lessee's customary business
practices, and any Eligible Vehicle, if rejected, will be deemed a Casualty
hereunder to the extent the Lessor has paid the Capitalized Cost thereof to the
Manufacturer, dealer or other seller thereof or to the applicable Lessee. 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 Eligible
Vehicle to the Manufacturer, dealer or other seller thereof pursuant to the
preceding sentence.
(b) Notwithstanding any provision in this Lease to the contrary, any
Series 1997 Vehicle titled in the name of a nominee for the Lessor or any Lessee
pursuant to a vehicle title nominee
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agreement with respect to which the Lessor or such Lessee has received Rating
Agency Confirmation shall nonetheless be deemed for purposes of this Lease to be
titled in the name of the Lessor or such Lessee, as the case may be.
Section 2.3. Payment of Purchase Price by Lessor, Certain Additional
Payments to the Servicer. (a) Refinanced Vehicles and Eligible Receivables on
Lease Commencement Date. With respect to the Refinanced Vehicles of National,
Alamo, Value and Spirit being refinanced on the Lease Commencement Date, subject
to satisfaction of the requirements of Section 4, the Lessor shall, on the Lease
Commencement Date, (i) pay to the party specified in the National Payoff Letter
an amount equal to (x) the aggregate Net Book Value as of the LeaseCommencement
Date of the Refinanced Vehicles with respect to which National is the Lessee and
(y) the face amount of the Eligible Receivables being refinanced by National on
the Lease Commencement Date, (ii) pay to the party specified in the Alamo Payoff
Letter an amount equal to (x) the aggregate Net Book Value as of the Lease
Commencement Date of the portion of the Refinanced Vehicles with respect to
which Alamo is the Lessee and (y) the face amount of the Eligible Receivables
being refinanced by Alamo on the Lease Commencement Date, (iii) pay to the party
specified in the Value Payoff Letter an amount equal to (x) the aggregate Net
Book Value as of the Lease Commencement Date of the portion of the Refinanced
Vehicles with respect to which Value is the Lessee and (y) the face amount of
the Eligible Receivables being refinanced by Value on the Lease Commencement
Date and (iv) pay to the party specified in the Spirit Payoff Letter an amount
equal to (x) the aggregate Net Book Value as of the Lease Commencement Date of
the portion of the Refinanced Vehicles with respect to which Spirit is the
Lessee and (y) the face amount of the Eligible Receivables being refinanced by
Spirit on the Lease Commencement Date.
(b) Refinanced Vehicles and Eligible Receivables. On any Vehicle
Funding Date on which a Lessee (including any Additional Lessee) desires to
refinance Refinanced Vehicles and related Eligible Receivables, the Lessor
shall, subject to satisfaction of the requirements of Section 4, on the related
Vehicle Funding Date, pay to or as directed by such Lessee an amount equal to
(x) the aggregate Net Book Value as of such Vehicle Funding Date of such
Refinanced Vehicles and (y) the face amount of the Eligible Receivables being
refinanced by such Lessee on the related Vehicle Funding Date.
(c) Vehicles Other than Refinanced Vehicles. Upon satisfaction of the
requirements of Section 2.1 in respect of any Vehicle, then on or prior to the
proposed Vehicle Funding Date for such Vehicle, but not more than five Business
Days prior to such proposed Vehicle Funding Date, the Lessor or its agent shall,
subject to satisfaction of the requirements of Section 4, pay or cause to be
paid the Capitalized Cost of such Vehicle to the Manufacturer, dealer or other
seller of such Vehicle or reimburse or cause to be reimbursed the applicable
Lessee for funds expended by such Lessee to purchase such Vehicle. Such payment
shall be made in accordance with the payment terms of such Manufacturer, dealer
or other seller, as applicable. The Master Servicer or the applicable Lessee, as
agent of the Lessor, shall be authorized to transfer funds of the
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Lessor (but not funds in any account in which the Trustee has a Lien or
other interest) representing the amount payable by the Lessor in accordance with
the foregoing by check, wire transfer or other electronic funds transfer to the
Manufacturer, dealer or other seller of such Vehicle or to reimburse the
applicable Lessee for funds expended by such Lessee to purchase such Vehicle.
The Lessee leasing such Vehicle shall pay all applicable costs and expenses of
freight, packing, handling, storage, shipment and delivery of such Vehicle to
the extent that the same have not been included within the Capitalized Cost.
(d) Excluded Payments. All amounts paid by the Manufacturer, dealer or
other seller on account of vehicle preparation services or work covered by
warranty performed by a Servicer with respect to Vehicles acquired or financed
pursuant to this Lease or as incentive payments shall inure to the benefit of
such Servicer and, to the extent any such payments are received by
the Lessor, the Trustee or the Master Collateral Agent, shall promptly be paid
over to such Servicer.
Section 2.4. Non-liability of Lessor. The Lessor shall not be liable to
any Lessee for any failure or delay in obtaining Vehicles or making delivery
thereof. AS BETWEEN THE LESSOR AND ANY LESSEE, ACCEPTANCE FOR LEASE OF THE
VEHICLES SHALL CONSTITUTE THE LESSEE'S ACKNOWLEDGMENT AND AGREEMENT THAT THE
LESSEE HAS FULLY INSPECTED SUCH VEHICLES, THAT THE VEHICLES ARE IN GOOD ORDER
AND CONDITION AND ARE OF THE MANUFACTURE, DESIGN, SPECIFICATIONS AND CAPACITY
SELECTED BY THE LESSEE, THAT THE LESSEE IS SATISFIED THAT THE SAME ARE SUITABLE
FOR THIS USE AND THAT THE LESSOR IS NOT A MANUFACTURER, AN AGENT OF THE
MANUFACTURER OR OTHERWISE ENGAGED IN THE SALE OR DISTRIBUTION OF VEHICLES, AND
HAS NOT MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATION, WARRANTY OR COVENANT,
EXPRESS OR IMPLIED, WITH RESPECT TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, CONDITION, QUALITY, CAPABILITY, WORKMANSHIP, DURABILITY OR SUITABILITY
OF THE VEHICLE IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES OR USES
OF THE 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 THE LESSEE, THE
APPLICABLE LESSEE AGREES TO BEAR ALL SUCH RISKS AT ITS SOLE COST AND EXPENSE.
EACH LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO MAKE CLAIMS AGAINST THE LESSOR AND
ANY LEASED VEHICLE FOR BREACH OF ANY WARRANTY OF ANY KIND WHATSOEVER AND, AS TO
THE LESSOR, EACH LESSEE LEASES THE LEASED VEHICLES "AS IS." The Lessor shall not
be liable for any failure or delay in delivering any Vehicle ordered for lease
pursuant to this Lease, 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
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restriction, or any cause beyond the Lessor's direct control. IN NO EVENT SHALL
THE LESSOR BE LIABLE FOR ANY INCONVENIENCE, 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.
SECTION 3. TERM.
Section 3.1. Vehicle Lease Commencement Date. The "Vehicle Lease
Commencement Date" shall mean, (i) for each Vehicle in the Initial Fleet as of
the VFN Closing Date, the VFN Closing Date, or with respect to each Vehicle in
the Initial Fleet of an Additional Lessee, the Additional Lessee Closing Date,
or with respect to each Vehicle included in the Initial Fleet of a Lessee
pursuant to a Fleet Purchase Transaction, the Vehicle Funding Date for such
Vehicle, and (ii) for each other Vehicle, including Refinanced Vehicles other
than the Initial Fleet, the date referenced in the Vehicle Order or Refinanced
Vehicle Schedule, as applicable, with respect to such Vehicle, which in no event
shall be later than the date that funds are expended by the Lessor to acquire,
finance or refinance the acquisition of such Vehicle (the "Vehicle Funding Date"
for such Vehicle). A vehicle shall be deemed hereunder to be a Vehicle leased
under this Lease on each day during the period (the "Vehicle Term") from and
including the Vehicle Lease Commencement Date for such Vehicle to but excluding
the Vehicle Lease Expiration Date for such Vehicle.
Section 3.2. Lease Commencement Date. The "Lease Commencement Date"
shall mean the VFN Closing Date. The "Lease Expiration Date" shall mean the
later of (i) the date of the final payment in full of the last Series 1997
Variable Funding Note outstanding and, if any, all other Shared Collateral
Series Notes, and all outstanding Carrying Charges, following the termination of
the agreement of the Series 1997 Variable Funding Noteholders to make Advances
and the ability of the Trustee to make available to the Lessor proceeds from the
VFN Collection Accounts pursuant to the Series 1997 Variable Funding
Supplements, and (ii) the Vehicle Lease Expiration Date for the last Vehicle
subject to lease by the Lessee hereunder. The "Term" of this Lease shall mean
the period commencing on the Lease Commencement Date and ending on the Lease
Expiration Date.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1. Conditions to Effectiveness of this Lease. It shall be a
condition precedent to the leasing of any Vehicles under this Lease that this
Lease shall have become effective in accordance with this Section 4.1. This
Lease shall become effective on the Lease Commencement Date, subject to the
satisfaction of the following conditions:
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(a) All conditions to the effectiveness of the Series 1997
Variable Funding Supplements and the issuance of the Series 1997
Variable Funding Notes thereunder and the Second Amended and Restated
Master Collateral Agreement shall have been satisfied in all respects;
and
(b) The prior or concurrent delivery by the Lessees to the
Lessor, the Master Collateral Agent and the Trustee of each of the
following documents (in form and substance satisfactory to the Lessor,
the Master Collateral Agent and the Trustee):
(i) Resolutions. Copies of resolutions of the
Board of Directors of the Guarantor and each Lessee
authorizing or ratifying the execution, delivery and
performance of this Lease and the other Related Documents to
which it is party and capacity as Guarantor, Lessee or as
Servicer or otherwise, with respect to this Lease and such
other Related Documents, duly certified by the Secretary or an
Assistant Secretary thereof;
(ii) Consents, etc. Certified copies of all
documents evidencing any necessary corporate action, consents
and governmental approvals (if any) with respect to this Lease
and the other Related Documents to which the Guarantor or any
Lessee is party;
(iii) Incumbency and Signatures. A certificate of
the Secretary or an Assistant Secretary of the Guarantor and
each authorized to sign this Lease and the other Related
Documents signature of each such individual (the Lessor, the
Master Collateral Agent and the Trustee may conclusively rely
on each uch certificate until formally advised by a like
certificate of any changes therein);
(iv) Opinions of Counsel. The favorable opinions of
Xxxxx, Xxxxx & Xxxxx, special New York counsel for the Lessees
and the Guarantor, and Xxxxx, Xxxxx, Xxxxxxx & Xxxxx, counsel
to the Lessees and the Guarantor, in each case addressed to
the Lessor, the Trustee, the Master Collateral Agent, the
Series 1997-1 Support Letter of Credit Providers, the initial
Series 1997 Variable Funding Noteholders and the Rating
Agencies and satisfactory in form and substance to the
addressees thereof;
(v) Good Standing Certificates. Certificates of
good standing for the Guarantor and each Lessee in the
jurisdiction of its organization and the jurisdiction of its
principal place of business;
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(vi) Search Reports. A written search report from a
Person satisfactory to the Lessor, the Master Collateral Agent
and the Trustee, listing all effective financing statements
that name any Lessee as debtor or assignor and that are filed
in the jurisdictions in which filings were made pursuant to
subsection (vii) below, together with copies of such financing
statements, and tax and judgment lien search reports from a
Person satisfactory to the Lessor, the Master Collateral Agent
and the Trustee showing no evidence of such liens filed
against any Lessee and covering any Series 1997 VFN Collateral
(other than in connection with any Related Documents);
(vii) Financing Statements. Executed, proper
financing statements on Form UCC-1 with respect to each
Lessee, (i) naming the Lessee as debtor and the Master
Collateral Agent as secured party, or other, similar
instruments or documents, as may be necessary or, in the
reasonable opinion of the Lessor, the Master Collateral Agent
or the Trustee, desirable under the UCC of all applicable
jurisdictions to perfect the Master Collateral Agent's
interest in the Master Collateral with respect to which the
Trustee (for the benefit of the Series 1997 Variable Funding
Noteholders) is designated as the Beneficiary and (ii) naming
the Lessee as debtor, the Lessor as secured party and the
Master Collateral Agent as assignee, as may be necessary or
desirable under the UCC of all applicable jurisdictions to
perfect the security interest of the Lessor hereunder and the
assignment of the same to the Master Collateral Agent;
(viii) Series 1997 Variable Funding Supplements. An
executed copy of each Series 1997 Variable Funding Supplement;
(ix) Indenture. An executed copy of the Indenture;
(x) Master Collateral Agreement. An executed copy
of the Second Amended and Restated Master Collateral Agency
Agreement;
(xi) Assignment Agreement. An executed copy of the
Assignment Agreement of each Manufacturer of Program Vehicles
(including Refinanced Vehicles) which will be leased under
this Lease on the VFN Closing Date;
(xii) Certified Copy of Manufacturer Program. A copy
of each Manufacturer Program (and, to the extent required by a
Rating Agency, an opinion of counsel to such Manufacturer or
Officer's Certificate on behalf of such Manufacturer as to the
enforceability thereof in form satisfactory to the Trustee and
the Lessor and addressed to the Master Collateral Agent)
relating to Program Vehicles which will be leased hereunder on
the VFN Closing Date and, from each Lessee, an Officer's
Certificate, dated as of the VFN Closing Date, and duly
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executed by an Authorized Officer of such Lessee, certifying
that each such copy is true, correct and complete as of the
VFN Closing Date; and
(xiii) Other. Such other documents as the Master
Collateral Agent, the Trustee or the Lessor may reasonably
request.
Section 4.2. Conditions to Each Lease of Vehicles. The agreement of the
Lessor to make available any Acquired Vehicle for lease to a Lessee, to make
available financing for the acquisition or refinancing of any Financed Vehicle
or Synthetic Lease Vehicle for lease to a Lessee as described in a Vehicle
Order, or to make available funding for the financing or refinancing of
Refinanced Vehicles and Eligible Receivables, is subject to the terms and
conditions of the Indenture and the following conditions precedent as of the
Vehicle Funding Date for such Vehicle and each Lessee hereby agrees that each
delivery of a Master Servicer direction to the Trustee pursuant to a Series 1997
Variable Funding Supplement requesting the Trustee to make available to the
Lessor funds for the making of Series 1997 Lease Advances or the acceptance of
proceeds of Series 1997 Lease Advances in respect of any applicable Vehicle
Orders or Refinanced Vehicle Schedules 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 and Eligible Receivables identified in such Vehicle Order or Refinanced
Vehicle Schedule have been satisfied as of the date of such Vehicle Order or
Refinanced Vehicle Schedule:
(a) Vehicle Order. The applicable Lessee shall have complied
with the applicable provisions of Section 2.1 of this Lease.
(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 Series 1997 Lease Advance.
(c) Funding. The aggregate amount of funds to be expended by
the Lessor on any one date to acquire or finance the acquisition of any
Vehicles shall not exceed the sum of (a) the aggregate Net Book Value
of all such Vehicles plus (b) the aggregate face amount of any related
Eligible Receivables being refinanced on such date.
(d) Related Documents. The leasing of such Vehicle shall not
be prohibited by the provisions of this Lease or the Series 1997
Variable Funding Supplements or any other Supplement, if any, relating
to any Shared Collateral Series Notes, and sufficient proceeds shall be
available therefor under the Series 1997 Variable Funding Supplements
as a result of the issuance of the Series 1997 Variable Funding Notes
or, if applicable, any other Shared Collateral Series Notes, and all
conditions precedent to the making of Advances from the VFN Collection
Accounts, as provided in and pursuant to the terms of the Series 1997
Variable Funding Supplements, shall have been satisfied.
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(e) Maximum Non-Program Percentage. The leasing of such
Vehicles will not cause the aggregate Net Book Value of Non-Program
Vehicles then being leased under this Lease to exceed the Maximum
Non-Program Percentage, will not cause any of the Lease commitments
expressed in Section 3 of each of Annex A, B and C to be exceeded and
will not cause a violation of the Maximum Manufacturer Concentration.
(f) Title. NFLP or, with respect to the Financed Vehicles and
Synthetic Lease Vehicles, the applicable Lessee, as the case may be,
shall have good and marketable title to each Series 1997 Vehicle
purchased thereby with the proceeds of Series 1997 Variable Funding
Notes, free and clear of all Liens and encumbrances, other than any
Permitted Liens.
(g) Master Collateral Agent. Each Lessee shall have granted to
the Master Collateral Agent, for the benefit of the Trustee on behalf
of the Series 1997 Noteholders, a first priority security interest in
all Series 1997 Vehicles now or hereafter purchased or financed by NFLP
with the proceeds of Series 1997 Variable Funding Notes or with any
other capital of NFLP.
(h) Assignment Agreements. On or prior to the lease thereof,
the Trustee shall have received executed counterparts of the Assignment
Agreements related to the assignment of rights under each Manufacturer
Program under which Series 1997 Vehicles will be or have been purchased
and are proposed to be leased under the Series 1997 Lease, dated as of
the Series 1997 Closing Date (or, if later, on or prior to the date the
related Manufacturer Program becomes an Eligible Manufacturer Program),
duly executed by the applicable Lessee and/or NFLP, as assignor, and
the Master Collateral Agent, as assignee.
(i) Manufacturer Programs. On or prior to the lease thereof,
the Trustee shall have received a copy of each Manufacturer Program
under which Series 1997 Vehicles will be or have been purchased and are
proposed to be leased under the Series 1997 Lease and an Officer's
Certificate, dated the Series 1997 Closing Date (or, if later, on or
prior to the date such Manufacturer Program becomes an Eligible
Manufacturer Program), and duly executed by an Authorized Officer of
NFLP, certifying that each such copy is true, correct and complete as
of the VFN Closing Date (or, if later, on or prior to the date such
Manufacturer Program becomes an Eligible Manufacturer Program). Each
Manufacturer Program covering Program Vehicles being leased under the
Series 1997 Lease shall be in full force and effect, and shall be
enforceable against the related Manufacturer in accordance with its
terms.
(j) Limitation on Acquisition of Non-Program Vehicles. NFLP
shall not acquire any Non-Program Vehicle for leasing under this Lease
if, after giving effect to the acquisition of such Vehicle by NFLP and
the leasing of each other Series 1997 Vehicle on such date, the Series
1997-1 Minimum Non-Program Enhancement Percentage, the Series 1997-2
Minimum Non-Program Enhancement Percentage, the Series 1997-3
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Minimum Non-Program Enhancement Percentage or the Series 1997-4 Minimum
NonProgram Enhancement Percentage would exceed 25.0%.
(k) Eligible Vehicle. Each Vehicle to be leased hereunder on
such date shall be an Eligible Vehicle.
Section 4.3. Additional Conditions to Leases of Refinanced Vehicles. In
addition to the conditions set forth in Section 4.2 above, in connection with
the leasing of Refinanced Vehicles and related Eligible Receivables, to evidence
the refinancing of such Refinanced Vehicles and related Eligible Receivables on
the applicable Vehicle Funding Date and the conveyance on such date of a
security interest in such Refinanced Vehicles and related Eligible Receivables
to the Master Collateral Agent, the applicable Lessees shall have made available
to the Lessor on or prior to the applicable Vehicle Funding Date the following:
(a) a Refinanced Vehicle Schedule concerning such Refinanced
Vehicles and related Eligible Receivables being refinanced on such
Vehicle Funding Date;
(b) a report of the results of a search of the appropriate
records of each state in which each Lessee of such Refinanced Vehicles
does business and the county and state in which each Lessee's principal
office is located, which shall show no liens or other security
interests (other than Permitted Liens) with respect to such Vehicles
and the related Manufacturer Programs (to the extent not already liened
and assigned to the Master Collateral Agent) or, in the event that such
search reveals any such non-permitted Lien or security interest, there
shall be delivered to the Trustee a termination of such Lien or
security interest together with appropriate UCC termination statements
or UCC partial releases thereof;
(c) confirmation from each lender holding a security interest
in any Refinanced Vehicle and 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 related Eligible Receivable has been released;
(d) a fully executed assignment agreement granting and
assigning to the Master Collateral Agent (to the extent not already
granted and assigned) a first priority security interest in each such
Refinanced Vehicle and any Eligible Receivables, the related
Manufacturer Programs, if any, and any other Series 1997 VFN Collateral
relating to such Refinanced Vehicles and Eligible Receivables;
(e) with respect to any of such Refinanced Vehicles which are
in the Initial Fleet, each Lessee thereof shall have delivered to the
Master Collateral Agent a duly executed Assignment and Nominee
Agreement satisfactory in form to the Lessor and the Trustee;
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(f) 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 Master
Collateral Agent in the Eligible Receivables;
(g) an Officer's Certificate stating that all the conditions
precedent under this Lease to the leasing of such Refinanced Vehicles
and financing of the Eligible Receivables under this Lease have been
satisfied, including a representation that each such receivable is an
Eligible Receivable.
SECTION 5. RENT AND CHARGES. Each Lessee will pay Rent and certain
other charges on a monthly basis as set forth in this Section 5.
Section 5.1. Payment of Rent. On each Payment Date, each Lessee shall
pay to the Lessor the aggregate of all Rent payable on such Payment Date with
respect to the Vehicles leased by such Lessee, as provided in the related Lease
Annexes.
Section 5.2. Payment of Monthly Supplemental Payments and Additional
Synthetic Lease Payments. On each Payment Date, each Lessee shall pay to the
Lessor the Monthly Supplemental Payment that has accrued during the Related
Month with respect to the Financed Vehicles, as provided in Sections 6 and 7 of
Annex B and all Additional Synthetic Lease Payments and other payments due on
such Payment Date with respect to the Synthetic Lease Vehicles, as provided in
Sections 6, 8 and 11 of Annex C.
Section 5.3. Payment of Termination Payments and Casualty Payments. On
each Payment Date, each Lessee shall pay to the Lessor all Casualty Payments and
Termination Payments that have accrued with respect to the Series 1997 Vehicles,
as provided in, respectively, Sections 7 and 12.3 of the Base Lease.
Section 5.4. Late Payment. In the event any Lessee fails to remit
payment of any amount due under this Series 1997 Lease on or before the Payment
Date therefor or when otherwise due and payable hereunder, the amount not paid
will be considered delinquent and such Lessee will pay a late charge during each
Interest Period equal to the product of (a) the VFR for such Interest Period
(converted to a rate per annum) plus 1%, times (b) the delinquent amount for the
period from the Payment Date (or other date) on which such payment was due until
the date such delinquent amount (with accrued interest) is received by the
Trustee (calculated on the basis of a 360-day year).
Section 5.5. Making of Payments. All payments of Rent and of all other
Liabilities shall be made by the applicable Lessee to, or for the account of,
the Lessor (or, in the case of any payment pursuant to Section 15, the
applicable Indemnified Person) in immediately available funds, without setoff,
counterclaim or deduction of any kind. All such payments shall be made to the
Series 1997 Collection Account or, in the case of payments made pursuant to
Section 24.12(iii) or (iv), the Master Collateral Account (or, in each such
case, such other account as the Trustee may from time to time specify to the
Lessees) or, in the case of any such payment
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pursuant to Section 15 to, or for the account of, any Indemnified Person other
than NFLP, to the account designated by such Indemnified Person to the
applicable Lessee, in each case with such payment to be made not later than
12:00 noon, New York City time, on the date due; and funds received after that
hour shall be deemed to have been received by or for the account of the
Indemnified Person on the next following Business Day. The Lessor hereby
specifies that all (i) payments made in respect of Program Vehicles by the
Manufacturers and related auction dealers under the Manufacturer Programs, (ii)
amounts representing the proceeds from sales of Program Vehicles (including
amounts paid to a Lessee by a Manufacturer as a result of the Lessee's sale of
such Program Vehicle outside such Manufacturer's Manufacturer Program) by a
Lessee to third parties (other than under any related Manufacturer Program) and
(iii) payments with respect to any other Master Collateral for the Series 1997
Variable Funding Notes (other than amounts described in Section 2.3(d)), shall
be deposited in the Master Collateral Account for the benefit of the Trustee (on
behalf of the Series 1997 Noteholders) and the Other VFN Beneficiaries. If any
payment of Rent (or other Liability) falls due on a day which is not a Business
Day, then such due date shall be extended to the next following Business Day and
Monthly Finance Rent and Monthly Variable Rent (as the case may be) shall accrue
through such Business Day.
SECTION 6. RESERVED.
SECTION 7. CASUALTY AND INELIGIBLE VEHICLES. If a Series 1997 Vehicle
becomes a Casualty or ceases to be an Eligible Vehicle, then the Lessee thereof
shall (a) cause the Master Servicer to include notice of such occurrence in the
next Monthly Certificate required to be delivered by the Master Servicer under
Section 24.7(vi), and (b) on the Payment Date next succeeding the last day of
the Related Month in which the Lessee obtained actual knowledge that such
Vehicle has become a Casualty or ceased to be an Eligible Vehicle, pay to the
Lessor an amount (a "Casualty Payment") equal to the Termination Value of such
Vehicle, calculated as of the first day of the Related Month in which the Lessee
obtained actual knowledge that such Vehicle became a Casualty or ceased to be an
Eligible Vehicle (net of Monthly Base Rent, Monthly Supplemental Payments and
Additional Synthetic Lease Payments made in respect of such Vehicle during such
Related Month). Upon payment by the Lessee to the Lessor in accordance herewith
of the Casualty Payment for any Series 1997 Vehicle that has become a Casualty
or ceased to be an Eligible Vehicle, (i) the Lessor, if requested by the Lessee,
shall cause title to any such Vehicle that is an Acquired Vehicle to be
transferred to the Lessee to facilitate liquidation of such Vehicle by the
Lessee, (ii) the Lessee shall be entitled to any physical damage insurance
proceeds applicable to such Vehicle (if at such time the Lessee carries such
insurance coverage), and (iii) the Lien of the Master Collateral Agent on such
Vehicle shall automatically be released thereby.
SECTION 8. VEHICLE USE. Each Lessee shall use Vehicles leased hereunder
solely for such Lessee's domestic daily rental car operations, whether through
Fleet Sharing Parties or directly; provided that a Lessee (the "Named Lessee")
may permit another Lessee to use Vehicles leased by the Named Lessee hereunder
in the ordinary course of the domestic daily rental car operations of such other
Lessee (but the Named Lessee shall remain fully liable for its obligations under
this Series 1997 Lease and the other Related Documents); provided further that
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a Lessee may, from time to time, permit Fleet Sharing Parties to use Vehicles
leased by such Lessee hereunder pursuant to Lessee Agreements, including Fleet
Sharing Agreements, used in the ordinary course of the Lessee's business and
each such Fleet Sharing Party shall rent Vehicles used by it pursuant to a Fleet
Sharing Agreement to consumers in the ordinary course of such Fleet Sharing
Party's domestic daily rental car operations; provided further, however, that
the aggregate Net Book Value of all Vehicles subject to Fleet Sharing Agreements
on any day shall not exceed an amount equal to (a) 10% of the aggregate Net Book
Value of all Vehicles leased under this Series 1997 Lease on such day, or (b)
such greater amount as each Rating Agency shall have confirmed in writing will
not result in the reduction or withdrawal of the then current rating of any
outstanding Commercial Paper Notes of any Series 1997 Variable Funding
Noteholder. Notwithstanding any such Lessee Agreement, the Lessee shall remain
fully liable for its obligations under this Lease and the other Related
Documents (including any obligation hereunder or thereunder that it may cause
any Fleet Sharing Party to perform or fulfill). Each 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 Master
Collateral Agent, the Master Servicer or the Trustee shall from time to time
reasonably request in order (x) to establish, perfect and maintain the Lessor's
title to and interest in the Acquired Vehicles and the related Certificates of
Title and the Lessee's title to and interest in all other Vehicles and the
related Certificates of Title as against any third party in any applicable
jurisdiction and (y) to establish, perfect and maintain the Master Collateral
Agent's lien on all Series 1997 Vehicles as noted (other than in respect of the
Initial Fleet) on the related Certificates of Title as a perfected
first-priority lien in any applicable jurisdiction. A Lessee may, at the
Lessee's sole expense, change the place of principal location of any Series 1997
Vehicles. Within sixty (60) days after any such change of location, the Lessee
shall take all actions necessary (i) to maintain the perfected first-priority
Lien of the Master Collateral Agent on such Vehicles as noted (other than in
respect of the Initial Fleet) on the Certificates of Title with respect to such
Vehicles and the Lessor shall cooperate to the extent required for the Lessee to
do so, and (ii) to meet all material legal requirements applicable to such
Vehicles. Following a Lease Event of Default or Manufacturer Event of Default,
and upon the Lessor's request, each Lessee shall advise the Lessor in writing
where all Vehicles leased hereunder as of such date are principally located. No
Lessee shall knowingly use any Vehicles, or knowingly permit the same to be
used, for any unlawful purpose. Each Lessee shall and shall require the Fleet
Sharing Parties to use reasonable precautions to prevent loss or damage to
Vehicles. Each Lessee shall or shall cause the Fleet Sharing Parties to comply
in all material respects with all applicable statutes, decrees, ordinances and
regulations regarding acquiring, titling, registering, leasing, insuring and
disposing of Vehicles and shall and shall require the Fleet Sharing Parties to
take reasonable steps to ensure that operators are licensed. Each Lessee shall
or shall cause the Fleet Sharing Parties to perform, at its own expense, such
vehicle preparation and conditioning services with respect to Vehicles leased by
it as are customary.
SECTION 9. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND
FINES. Each Lessee, at its expense, shall be responsible for proper registration
and licensing of Vehicles leased by it hereunder, for submitting the appropriate
documentation to the appropriate state authorities to obtain Certificates of
Title for Series 1997 Vehicles reflecting the
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name of the Lessor (in the case of Acquired Vehicles) or such Lessee (in the
case of Financed Vehicles and Synthetic Lease Vehicles), in each case (other
than with respect to Vehicles in the Initial Fleet) with the Lien of the Master
Collateral Agent noted thereon as first lienholder, and where required, the
Lessee shall or shall cause the Fleet Sharing Parties to have Vehicles inspected
by any appropriate governmental authority; provided, however, that possession of
all Certificates of Title shall remain with the Servicer of the related Vehicles
or the Master Servicer unless a Liquidation Event of Default or Series 1997
Limited Liquidation Event of Default shall have occurred and be continuing, in
which event, upon the request of the Trustee or the Master Collateral Agent,
each Lessee shall deliver the Certificates of Title for the Series 1997 Vehicles
leased by it to the Master Collateral Agent. Each Lessee shall pay or cause to
be paid all registration fees, title fees, license fees, traffic summonses,
penalties, judgments and fines and other similar amounts incurred with respect
to any Series 1997 Vehicle during the Vehicle Term for such Vehicle or imposed
during the Vehicle Term for such Vehicle by any governmental authority or any
court of law or equity in connection with the Lessee's operation of Vehicles,
and any such amounts paid by the Lessor on a Lessee's behalf, in its discretion
upon at least fifteen (15) days' prior notice to the Lessee, will be reimbursed
within thirty (30) days of the Lessor notifying the Lessee of such payment;
provided, however, that the Lessor shall not pay on any Lessee's behalf any
traffic summons, or any penalty, judgment or fine for so long as such amount is
being contested by the Lessee in good faith and by appropriate proceedings with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP and provided that such Lessee has agreed in
writing to indemnify and hold the Lessor harmless from and against all loss,
liability and expense arising out of such unpaid amounts (and, in any case, for
so long as forfeiture of any Vehicles or other Master Collateral will not result
from the failure to pay any such amounts). The Lessor agrees to execute a power
of attorney substantially in the form of Attachment B hereto (a "Power of
Attorney"), and such other documents as may be necessary in order to allow the
Lessee to title, register and dispose of the Acquired Vehicles; and each Lessee
acknowledges and agrees that with respect to the Acquired 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 17.3(vii).
SECTION 10. MAINTENANCE AND REPAIRS. Each Lessee shall or shall cause
the Fleet Sharing Parties to pay for all maintenance and repairs to keep
Vehicles leased by it hereunder in good working order and condition, and shall
or shall cause the Fleet Sharing Parties to maintain such Vehicles as required
in order to keep the Manufacturer's warranty in force. Each Lessee shall or
shall cause the Fleet Sharing Parties to return each Vehicle to an authorized
Manufacturer facility or the applicable Manufacturer's authorized warranty
station (which may be a facility of any Lessee) for warranty work. Each Lessee
shall or shall cause the Fleet Sharing Parties to comply with any Manufacturer's
recall of any Vehicle. Each Lessee shall or shall cause the Fleet Sharing
Parties to pay, or cause to be paid, all usual and routine expenses incurred in
the use and operation of Series 1997 Vehicles leased by it hereunder including,
but not limited to, fuel, lubricants, and coolants. The Lessor, upon thirty (30)
days' prior notice to the applicable Lessee, may pay any such expenses that have
not otherwise been paid by, or on behalf of, such Lessee (including any failure
by a Fleet Sharing Party to pay any such expenses),
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and any expenses paid by the Lessor on a Lessee's behalf for maintenance,
repair, operation or use by the Lessee of Vehicles will promptly be reimbursed
(in any event no later than the next Payment Date following such payment) by
such Lessee to the Lessor. No Lessee shall, without the prior consent of the
Lessor, make any material alterations to (i) any Series 1997 Vehicle which is a
Program Vehicle which would result in a reduction of the Repurchase Price for
such Vehicle or make the Vehicle no longer eligible for repurchase under the
applicable Manufacturer Program or (ii) any Series 1997 Vehicle which is a
Non-Program Vehicle which is likely to materially adversely affect the resale
value of such Non-Program Vehicle. Any improvements or additions to an Acquired
Vehicle shall become and remain the property of the Lessor, except that any
addition or improvement to an Acquired Vehicle made by the Lessee shall remain
the property of the Lessee if it can be disconnected or removed from the Vehicle
without impairing the functioning or resale value thereof, other than any
function or value provided by such addition or improvement.
SECTION 11. MANUFACTURER WARRANTIES. If a Vehicle is covered by a
manufacturer's warranty, the Lessee thereof, 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.
SECTION 12. VEHICLE RETURN GUIDELINES.
Section 12.1. Vehicle Turn-in Condition. As used herein, the term
"vehicle turn-in condition" with respect to each Series 1997 Vehicle that is a
Program Vehicle means a set of criteria for evaluating a Vehicle upon its
delivery at the end of the applicable Vehicle Term, which criteria will be
determined in accordance with the related Manufacturer Program. Each Program
Vehicle not meeting the applicable Manufacturer Program's vehicle turn-in
condition requirements will, unless redesignated as a Non-Program Vehicle in
accordance with Section 14, be purchased by the related Lessee as if it were a
Casualty in accordance with the procedure set forth in Section 7.
Section 12.2. Disposition Procedure. (a) Program Vehicles. Unless such
Vehicle is redesignated as a Non-Program Vehicle in accordance with Section 14
or the Lessee thereof exercises its option to purchase such Vehicle as permitted
by, and pursuant to the requirements of, this Lease, or such Vehicle is sold in
the ordinary course outside the Manufacturer Program for proceeds that equal or
exceed the payment that would be obtained from the Manufacturerunder the
Manufacturer Program as contemplated by Section 27, then prior to the end of the
Vehicle Term, each Lessee will or will cause the related Fleet Sharing Party to
deliver each Program Vehicle leased by it hereunder (other than a Casualty or a
Vehicle that has ceased to be an Eligible Vehicle) to the nearest related
Manufacturer official auction or other facility designated by such Manufacturer
at the Lessee's sole expense and in accordance with the terms of the applicable
Manufacturer Program. Any transportation allowance (for delivery costs), auction
assistance allowance and any other allowances offered under a Manufacturer
Program, and any rebates or credits applicable to the unexpired term of any
license plates for a Vehicle shall inure to the benefit of the Lessee thereof
and, to the extent received by the Lessor, the
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Trustee or the Master Collateral Agent, shall promptly be paid over to the
applicable Lessee. Each Lessee will comply with the requirements of law and the
requirements of the Manufacturer Programs in connection with, among other
things, the delivery of Certificates of Title, documents of transfer signed as
necessary, signed Condition Reports, and signed odometer statements for the
Vehicles.
(b) Non-Program Vehicles. Each Lessee agrees to use commercially
reasonable efforts to dispose of, at its own expense, each Series 1997 Vehicle
that is a Non-Program Vehicle (i) in a manner reasonably likely to maximize
proceeds from such disposition and consistent with industry practice and (ii)
prior to the expiration of the Non-Program Maximum Term for such Non-Program
Vehicle.
Section 12.3. Termination Payments. On the first Payment Date on or
after the earlier of (a) the last day of the Related Month in which the
Repurchase Price with respect to any Program Vehicle that is an Acquired Vehicle
is received by the applicable Lessee, the Lessor, the Master Collateral Agent or
the Trustee by deposit into the Series 1997 Collection Account (provided that,
if for any reason the Repurchase Price has been received directly by a Lessee,
then to the extent that such Repurchase Price has not theretofore been deposited
in the Series 1997 Collection Account, it shall be deemed "received" for
purposes of this Section 12.3 no later than the second Business Day thereafter)
and (b) the thirtieth (30th) day after the expiration of the Repurchase Period
for such Acquired Vehicle that has not been redesignated as a Non-Program
Vehicle pursuant to Section 14, the applicable Lessee shall pay to the Lessor in
respect of such Acquired Vehicle any Excess Damage Charges, Excess Mileage
Charges, Missing Equipment Charges, early turnback surcharges and any other
similar charges and penalties (collectively a "Program Vehicle Termination
Payment") as determined by the Manufacturer or its agent in accordance with the
applicable Manufacturer Program. Upon the request of the Lessor, on the first
Payment Date on or after the earlier of (x) the last day of the Related Month in
which Disposition Proceeds from the sale or other disposition of an Acquired
Vehicle that is a NonProgram Vehicle, but is not a Casualty, are received by the
applicable Lessee, the Lessor, the Master Collateral Agent or the Trustee by
deposit into the Series 1997 Collection Account (provided that, if for any
reason the Repurchase Price has been received directly by a Lessee, then to the
extent that such Repurchase Price has not theretofore been deposited in the
Series 1997 Collection Account, it shall be deemed "received" for purposes of
this Section 12.3 no later than the second Business Day thereafter) and (y) the
thirtieth (30th) day after the date on which the Non-Program Maximum Term for
such Vehicle expires, the applicable Lessee shall pay to the Lessor an amount (a
"Non-Program Vehicle Termination Payment") equal to the product of (A) the sum
of all Program Vehicle Termination Payments due on such Payment Date, multiplied
by (B) a fraction, the numerator of which is the number of Series 1997 Vehicles
that are Non-Program Vehicles leased under this Lease during the Related Month
and the denominator of which is the number of Series 1997 Vehicles that are
Program Vehicles leased under this Lease during the Related Month (Program
Vehicle Termination Payments and NonProgram Vehicle Termination Payments,
collectively, "Termination Payments). If a 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
Vehicle at the Vehicle
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Lease Commencement Date by 1,500 and (ii) the number of months in the period
commencing on September 1 of the calendar year prior to the model year of such
Vehicle through the Vehicle Lease Commencement Date for such Vehicle. The
provisions of this Section 12.3 will survive the expiration or earlier
termination of the Term.
SECTION 13. [RESERVED].
SECTION 14. REDESIGNATION OF VEHICLES. (a) At any time, including upon
the occurrence of a Manufacturer Event of Default with respect to the
Manufacturer of any Program Vehicle or a Program Vehicle's becoming ineligible
for repurchase by its Manufacturer or for sale at Auction under the applicable
Manufacturer Program, due to physical damage, repair charges or accrued mileage,
in each case in excess of that permitted under the related Manufacturer Program,
or due to any failure or inability to return the Vehicle to the Manufacturer or
the designated auction prior to the expiration of the Repurchase Period, or due
to any other event or circumstance, the Servicer thereof may designate the
related Vehicle as a Non-Program Vehicle if such Vehicle, as a Non-Program
Vehicle, will be an Eligible Vehicle; provided that no Amortization Event or
Potential Amortization Event has occurred and is continuing and provided further
that no failure or violation of the requirements of Section 24.17 has occurred
and is continuing or would be caused by such redesignation and no failure or
violation of any other condition, requirement, or restriction specified in any
Series 1997 Variable Funding Supplement would be caused by such redesignation
(subject to the right of the Series 1997 Variable Funding Noteholders holding
the requisite Invested Amount of each applicable Series of Series 1997 Variable
Funding Notes to waive such violation, in each case as and to the extent
permitted under the Series 1997 Variable Funding Supplements); provided, in each
case, that (x) any additional Monthly Base Rent due with respect to each such
Vehicle, relating to the decrease, if any, of the Net Book Value of such Vehicle
under the newly applicable Depreciation Schedule, shall be paid on the next
succeeding Payment Date, and (y) the minimum level of Enhancement required under
each Series 1997 Variable Funding Supplement, after giving effect to such
designation, shall be satisfied on the date of designation.
(b) At any time, the Servicer may designate a Non-Program Vehicle as a
Program Vehicle if such Vehicle, as a Program Vehicle, will be an Eligible
Vehicle; provided that the related Manufacturer Program is an Eligible
Manufacturer Program, the related Manufacturer has acknowledged that such
Vehicle is entitled to the benefits of its Manufacturer Program and no failure
or violation of the conditions precedent to leasing of Program Vehicles in
Section 4.2 or any other condition, requirement, or restriction specified in any
Series 1997 Variable Funding Supplement would be caused by such redesignation;
provided, further, in each case, that any additional Monthly Base Rent due with
respect to each such Vehicle, relating to the decrease, if any, of the Net Book
Value of such Vehicle under the newly applicable Depreciation Schedule, shall be
paid on the next succeeding Payment Date.
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SECTION 15. GENERAL INDEMNITY AND PAYMENT OF EXPENSES.
Section 15.1. Indemnity and Payment of Expenses by the Lessees. Each
Lessee agrees jointly and severally to indemnify and hold harmless the Lessor
and the Lessor's directors, officers, agents and employees (collectively,
together with the Persons subject to indemnity under Section 15.2, the
"Indemnified Persons") against any and all claims, demands, actions, causes of
action, losses, costs, liabilities and damages of whatsoever nature, and all
reasonable expenses incurred in connection therewith (including reasonable fees
and disbursements of counsel), relating to or in any way arising out of:
Section 15.1.1. the ordering, delivery, acquisition, title on
acquisition, rejection, installation, possession, ownership, titling, retitling,
registration, re-registration, custody by the Lessee of title and registration
documents, use, non-use, misuse, operation, leasing, deficiency, defect,
transportation, repair, maintenance, control or disposition of any Vehicle
leased hereunder or to be leased hereunder, including, without limitation, any
such Vehicle shared with a Fleet Sharing Party. The foregoing shall include,
without limitation, any liability (or any alleged liability) of the Lessor or
any other Indemnified Person to any third party arising out of any of the
foregoing, including, without limitation, all reasonable legal fees, costs and
disbursements arising out of such liability (or alleged liability);
Section 15.1.2. all (i) federal, state, county, municipal, foreign or
other fees and taxes of whatsoever nature (other than income taxes on the
taxable net income attributable to the Lessor and any franchise taxes),
including but not limited to license, qualification, registration, sales, use,
gross receipts, ad valorem, business, property (real or personal), excise, motor
vehicle, and occupation fees and taxes, with respect to any Series 1997 Vehicle
or the acquisition, purchase, sale, lease, rental, use, operation, control,
ownership or disposition of any Series 1997 Vehicle by any Person or measured in
any way by the value thereof or by the business of, investment by, or ownership
by the Lessor or a Lessee with respect thereto, (ii) federal, state, local and
foreign income taxes and penalties and interest thereon, whether assessed,
levied against or payable by the Lessor or otherwise as a result of its being a
member of any group of corporations including the Lessee that file any tax
returns on a consolidated or combined basis (other than with respect to income
tax on the Lessor's own income), and (iii) documentary, stamp, filing,
recording, mortgage or other taxes (other than income taxes), if any, which may
be payable by the Lessor, a Lessee or any other Indemnified Person in connection
with the execution, delivery, recording or filing of this Lease or the other
Related Documents or the leasing of any Series 1997 Vehicles hereunder and any
penalties or interest with respect thereto;
Section 15.1.3. any violation by a Lessee of this Lease or of any
Related Documents to which a Lessee is a party or by which it is bound or any
laws, rules, regulations, orders, writs, injunctions, decrees, consents,
approvals, exemptions, authorizations, licenses and withholdings of objection of
any governmental or public body or authority and all other requirements having
the force of law applicable at any time to any Series 1997 Vehicle or any action
or transaction by a Lessee with respect thereto or pursuant to this Lease;
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Section 15.1.4. all reasonable 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 Lease 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 Series 1997 Variable Funding Noteholders, any
and all fees of the Servicers under the Indenture (to the extent attributable to
the Series 1997 Variable Funding Notes), fees payable to the Rating Agencies in
connection with their rating of the Commercial Paper Notes and any underwriting
or placement agency fees incurred in connection with the sale of the Series 1997
Variable Funding Notes or Commercial Paper Notes;
Section 15.1.5. all reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Lessor, the Master Collateral Agent, the Trustee, the Series 1997 Variable
Funding Noteholders or, if any, other Noteholders of Shared Collateral Series
Notes in connection with the administration (other than overhead expenses),
enforcement, waiver or amendment of this Lease and any other Related Documents,
and all indemnification and reimbursement obligations of the Lessor under the
Related Documents; and
Section 15.1.6. all costs, fees, expenses, damages and liabilities
(including, without limitation, the reasonable 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 Program Vehicles in connection with any audit or investigation
conducted by a Manufacturer under its Manufacturer Program).
All obligations provided for in this Section 15 shall survive any termination of
this Lease, and, to the extent that any of such obligations are unenforceable
for any reason, each Lessee agrees to the payment and satisfaction of each such
obligation which is permissible under applicable law.
Notwithstanding the foregoing, the Lessee shall have no duty to
indemnify any Indemnified Person for any claim, demand, liability, cost, or
expense to the extent such claim, demand, liability, cost or expense arises out
of or is due to such Person's gross negligence or willful misconduct.
Section 15.2. Indemnification of the Trustee. Each Lessee agrees to
indemnify and hold harmless the Trustee (and its officers, directors, employees
and agents) from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of, or arising out of or in connection with: (i)
any acts or omissions of such Lessee pursuant to this Lease and (ii) the
Trustee's appointment under the Indenture and the Trustee's performance of its
obligations thereunder, or any document pertaining to any of the foregoing to
which the Trustee is a signatory, including, but not limited to any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, however, no Lessee shall have any duty to
indemnify the Trustee to the extent such loss, liability, expense, damage or
injury suffered or sustained is due to the Trustee's negligence or willful
misconduct. Any such indemnification shall not be payable from the assets of the
Lessor. The provisions of this indemnity shall run
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directly to and be enforceable by the Trustee or any other Indemnified Person
subject to the limitations hereof. The indemnification provided for in this
Section 15.2 shall be in addition to any other indemnities available to the
Trustee and shall survive the termination of the duties of any Lessee hereunder
and the termination of this Lease or a document to which the Trustee is a
signatory or the resignation or removal of the Trustee.
Section 15.3. Reimbursement Obligation by the Lessees. Each Lessee
shall forthwith upon demand reimburse each Indemnified Person or the Trustee, as
the case may be, for any sum or sums expended with respect to any of the
foregoing, or shall pay such amounts directly upon request from such Indemnified
Person or the Trustee, as the case may be; provided, however, that, if so
requested by a Lessee, such Indemnified Person or the Trustee, as the case may
be, shall submit to such Lessee a statement documenting any such demand for
reimbursement or payment. To the extent that a Lessee in fact indemnifies any
Indemnified Person or the Trustee under the indemnity provisions of this Lease,
such Lessee shall be subrogated to the rights of such Indemnified Person or the
Trustee, as the case may be, in the affected transaction and shall have a right
to determine the settlement of claims therein. The obligations of each Lessee
contained in this Section 15 shall survive the expiration or earlier termination
of this Lease or any lease of any Vehicle hereunder; provided, however, that, in
the case of indemnities relating to the acquisition or leasing of Vehicles, the
factual or legal circumstances giving rise to the Lessor's or any other
Indemnified Person's exposure to liability occur during the period that this
Lease is in effect as to the Vehicle for which such exposure to liability arose.
Section 15.4. Notice to Lessee of Claims. Each applicable Indemnified
Person or the Trustee, as the case may be, shall promptly notify the Lessee in
writing (a "Notice of Claim") of the pendency of any such claim, action or facts
referred to in this Section 15 for which indemnity may be required.
Section 15.5. 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 a Lessee, be conducted by the Lessee. Following receipt of any Notice
of Claim, the Lessee will inform the Indemnified Person of its election to
defend such claim. Such Indemnified Person may participate in any such defense
at its own expense, provided such participation, in the Lessee's reasonable
opinion, does not interfere with the Lessee's defense. Each Lessee agrees that
no Indemnified Person will be liable to the Lessee for any claim caused directly
or indirectly by the inadequacy of any Vehicle for any purpose or any deficiency
or defect therein or the use or maintenance thereof or any repairs, servicing or
adjustments thereto or any delay in providing or failure to provide such or any
interruption or loss of service or use thereof or any loss of business, all of
which shall be the risk and responsibility of the Lessees, except to the extent
that any of the foregoing is caused by the gross negligence or willful
misconduct of such Indemnified Person. 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 not or is no longer a party to (or entitled to receive the
benefits of) this Lease. This general indemnity shall not affect any claims of
the type discussed above, or otherwise, which the Lessee may have against the
Manufacturer.
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SECTION 16. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Lease shall be
binding upon the Lessor, the Lessees, the Servicers, the Master Servicer, the
Guarantor and their respective successors and assigns, and shall inure to the
benefit of the Lessees, the Lessor, the Servicers, the Master Servicer, the
Guarantor and the Trustee (for the benefit of the Series 1997 Variable Funding
Noteholders and, if any, the other Noteholders of Shared Collateral Series
Notes), the Master Collateral Agent (for the benefit of the Trustee (on behalf
of the Series 1997 Variable Funding Noteholders and, if any, the other
Noteholders of Shared Collateral Series Notes) and the Other VFN Beneficiaries),
any other Indemnified Person, and their respective successors and assigns;
provided, however, that no Lessee or the Guarantor shall have the right to
assign its rights or delegate its duties under this Lease without (i) the prior
written consent of the Lessor, the Trustee, the Required VFN Noteholders and the
Majority Credit Enhancers and (ii) receipt of written confirmation from each of
the Rating Agencies that its then current rating will not be reduced or
withdrawn with respect to any outstanding Commercial Paper Notes or, if
applicable, Shared Collateral Series Notes as a result thereof; provided,
further, however, that nothing herein contained shall be deemed to restrict (w)
the right of any Lessee to rent Series 1997 Vehicles to customers in the
ordinary course of its domestic daily rental businesses, (x) the right of any
Named Lessee to permit another Lessee to use Vehicles leased by the Named Lessee
hereunder in the ordinary course of the domestic daily rental car operations of
such other Lessee in accordance with the terms of this Lease (but the Named
Lessee shall remain fully liable for its obligations under this Lease and the
other Related Documents), (y) the right of any Lessee to share certain of the
Vehicles leased by it with Fleet Sharing Parties (subject to the limitations
specified in Section 8), for use in the ordinary course of the domestic daily
rental businesses of such Fleet Sharing Parties in accordance with the terms of
this Lease or (z) the right of any Named Servicer to perform its obligations as
Servicer through another Servicer, subject to the limitations specified in
Section 26 and provided that the Named Servicer shall remain fully liable for
its obligations under this Lease and the other Related Documents. Any purported
assignment in violation of this Section 16 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 Lease.
SECTION 17. DEFAULT AND REMEDIES THEREFOR.
Section 17.1. Events of Default. Any one or more of the following
will constitute an event of default (a "Lease Event of Default") as that term is
used herein:
Section 17.1.1. Non-Payment of Liabilities . The occurrence of (i) a
default in the payment when due of any Monthly Base Rent, Additional Base Rent,
Monthly Variable Rent, Monthly Finance Rent, Termination Payment, Casualty
Payment, Additional Synthetic Lease Payment or Monthly Supplemental Payment, and
the continuance thereof for, except in the case of any Monthly Variable Rent or
Monthly Finance Rent, two (2) Business Days and, in the case of any Monthly
Variable Rent or Monthly Finance Rent, five (5) Business Days, or (ii) a default
by any Lessee or the Guarantor in the payment when due of any amount payable
under this Lease
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(other than amounts described in clause (i) above) and the continuance thereof
for five (5) Business Days;
Section 17.1.2. Unauthorized Assignment. Subject to the provisions of
Section 18 regarding Lessee Partial Wind-Down Events, any unauthorized
assignment or transfer of this Lease by a Lessee occurs;
Section 17.1.3. Non-Performance of Covenants and Obligations. Subject
to the provisions of Section 18 regarding Lessee Partial Wind-Down Events, any
Lessee, any Servicer or the Guarantor fails to comply with or perform any
covenant, condition, agreement or provision of this Lease (which failure does
not constitute a Lease Event of Default under any of the other provisions of
this Section 17) and the continuance of such failure (other than any such
failure to comply with the provisions of Section 25.1 or 25.2 hereof, as to
which there shall be no cure period) for thirty (30) days after the earlier of
(x) the date the Lessor, the Master Collateral Agent or the Trustee delivers
written notice thereof to such Lessee or the Guarantor and (y) the date such
Lessee or the Guarantor obtains actual knowledge thereof;
Section 17.1.4. Breach of Representation or Warranty. Subject to the
provisions of Section 18 regarding Lessee Partial Wind-Down Events, any
representation or warranty made by a Lessee, a Servicer or the Guarantor in this
Lease or any Related Document is incorrect in any material respect (to the
extent that such representation or warranty does not incorporate a materiality
limitation in its terms) as of the date such warranty or representation is made
and continues to be incorrect in any material respect (to the extent that such
warranty or representation does not incorporate a materiality limitation in its
terms) for a period of thirty (30) days after the earlier of (i) the date on
which written notice thereof shall have been given to such Lessee, or Servicer
or the Guarantor by the Lessor, the Master Collateral Agent or the Trustee, and
(ii) the date on which such Lessee or Servicer or the Guarantor obtains actual
knowledge thereof; or any schedule, certificate, financial statement, report,
notice, or other material writing furnished by a Lessee or a Servicer or the
Guarantor to the Lessor is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified and which
continues to be incorrect in any material respect for a period of ten (10) days
after the earlier of (a) the date on which written notice thereof shall have
been given to such Lessee or Servicer or the Guarantor by the Lessor, the Master
Collateral Agent or the Trustee, and (b) the date on which such Lessee or
Servicer or the Guarantor obtains actual knowledge thereof;
Section 17.1.5. Event of Bankruptcy. Subject to the provisions of
Section 18 regarding Lessee Partial Wind-Down Events, the occurrence of an Event
of Bankruptcy with respect to any Lessee or the Guarantor;
Section 17.1.6. Invalidity of Related Documents. All or any portion of
any Related Document (other than the Dealer Agreement) 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 Lessee or the Guarantor, or by any
governmental authority having jurisdiction over the Lessee or
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the Guarantor, as applicable, seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof).
Section 17.1.7. Series 1997 VFN Enhancement Deficiency. A Series 1997
VFN Enhancement Deficiency shall occur and such condition shall continue to
exist for more than one Business Day.
Section 17.1.8. Support Reimbursement Agreement. An Event of Default
occurs with respect to the Guarantor or (subject to the provisions of Section 18
regarding Lessee Partial Wind-Down Events) a Lessee under a Support
Reimbursement Agreement which continues beyond any applicable cure period
specified in such Support Reimbursement Agreement.
Section 17.1.9. Default Under Another Lease. There occurs a payment
default which results in the occurrence of a "lease event of default," as
defined under any other lease supporting any Series of Notes issued under the
Indenture (including, without limitation, any Series of Notes that is not a
Shared Collateral Series of Notes; provided that if such other lease is not
guaranteed by the Guarantor and not all of the Lessees are lessees under such
other lease, such default shall only be a Lease Event of Default and a Lessee
Partial Wind-Down Event with respect to the Lessees who are also lessees under
such other lease).
Section 17.2. Effect of Lease Event of Default; Series 1997-1 Limited
Liquidation Event of Default or Liquidation Event of Default. (a) If a Lease
Event of Default described in Section 17.1.1(i), 17.1.2, 17.1.5, 17.1.8, or
17.1.9 (subject to the provisions of Section 18, if such event is a Lessee
Partial Wind-Down Event) shall occur, then the Monthly Base Rent, Additional
Base Rent, Monthly Supplemental Payments, Additional Synthetic Lease Payments,
Casualty Payments (in each case calculated as if all Financed Vehicles and
Synthetic Lease Vehicles had become Casualties or had ceased to be Eligible
Vehicles during the Related Month), the Monthly Variable Rent, the Monthly
Finance Rent (in each case calculated as if the full amount of interest,
principal and other charges under the Series 1997 Variable Funding Notes and, if
any, other Shared Collateral Series Notes were then due and payable in full),
Termination Payments and all other charges, payments and amounts payable under
this Lease shall, subject to Section 17.4, automatically, without further action
by the Lessor or the Trustee, become immediately due and payable.
(b) If a Series 1997 Limited Liquidation Event of Default shall occur,
then, the Monthly Base Rent, Additional Base Rent, the Monthly Supplemental
Payments, the Additional Synthetic Lease Payments and Casualty Payments (in each
case, calculated as if each Financed Vehicle and Synthetic Lease Vehicle with
respect to which the Lessor has terminated the applicable Lessee's
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right to possession pursuant to Section 17.3(ii) or (iii) had become a Casualty
or had ceased to be an Eligible Vehicle during the Related Month), the Monthly
Variable Rent and the Monthly Finance Rent (in each case calculated as if the
full amount of interest, principal and other charges under the Series 1997
Variable Funding Notes and, if any, other applicable Shared Collateral Series
Notes were then due and payable in full) and Termination Payments (in each case,
with respect to each Vehicle with respect to which the Lessor has terminated the
applicable Lessee's right to possession pursuant to Section 17.3(ii) or (iii))
shall, subject to Section 17.4, automatically, without further action by the
Lessor or the Trustee, become immediately due and payable.
(c) If any Lease Event of Default (other than one described in
paragraph (a) above) or a Liquidation Event of Default shall occur, then,
subject to Section 18 if such event is a Lessee Partial Wind-Down Event, the
Lessor or the Trustee may declare the Rent and all other charges, amounts and
payments (calculated as described in paragraph (a) above) to be due and payable,
whereupon such Rent and such other charges, amounts and payments (as so
calculated) shall, subject to Section 17.4, become immediately due and payable.
Section 17.3. Rights of Lessor and Trustee Upon Lease Event of Default,
Liquidation Event of Default or Series 1997 Limited Liquidation Event of
Default. If a Lease Event of Default, Liquidation Event of Default or Series
1997 Limited Liquidation Event of Default shall occur:
(i) In the case of a Lease Event of Default that shall have
occurred and be continuing, the Lessor at its option may (or if and as
directed by the Trustee shall) proceed by appropriate court action or
actions, either at law or in equity, to enforce performance by the
applicable Lessee of the applicable covenants and terms of this Lease
or to recover damages for the breach hereof calculated in accordance
with Section 17.4;
(ii) In the case of a Liquidation Event of Default or a
Series 1997 Limited Liquidation Event of Default that shall have
occurred and be continuing, the Lessor and the Trustee, to the extent
provided in the Indenture and subject to Section 17.4 and Section 18,
shall have all the rights against the Lessees and the Series 1997 VFN
Collateral provided in the Indenture upon such a Liquidation Event of
Default or a Series 1997 Limited Liquidation Event of Default, as the
case may be, including the right to take (under the specified
circumstances) possession of Series 1997 Vehicles (to the extent
specified in this Lease or the Indenture, as applicable) immediately;
(iii) In the case of a Liquidation Event of Default that shall
have occurred and be continuing, the Trustee may, by notice in writing
to the Lessees (or, in the case of a Liquidation Event of Default
resulting from an event referred to in Section 17.1.5 of this Lease
with respect to a Lessee, the Lessee in respect of which such event has
occurred), terminate this Lease in its entirety (or, in the case of a
Liquidation Event of Default resulting from an event referred to in
Section 17.1.5 of this Lease with respect to a Lessee, terminate this
Lease only in respect of the Lessee in respect of which such event has
occurred), and/or the right of possession hereunder of the applicable
Lessees as to the Series 1997 Vehicles, and the Lessor may direct
delivery by the applicable Lessees of documents of title to the Series
1997 Vehicles, whereupon all rights and interests of the Lessees (or,
in the case of a Liquidation Event of Default resulting from an event
referred to in Section 17.1.5 of this Lease with respect to a Lessee,
the Lessee in respect of which such event has occurred), to the Series
1997 Vehicles (except as otherwise provided
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herein) will cease and terminate (but the Lessees will remain liable
hereunder as herein provided, calculated in accordance with Section
17.4); and, in the case of a Series 1997 Limited Liquidation Event of
Default that shall have occurred and be continuing, the Trustee may, by
notice in writing to the Lessees, terminate the right of possession
hereunder of any Lessee as to such number of Vehicles as will generate
proceeds from liquidation in an amount sufficient to pay all principal
of and interest on (and all other amounts due to the holders of) the
applicable Series 1997 Variable Funding Notes and, if any, all other
related Shared Collateral Series Notes, and the Lessor may direct
delivery by such Lessees of documents of title to such Vehicles,
whereupon all right, title and interest of such Lessees to such
Vehicles (except as otherwise provided herein) will cease and terminate
(but such Lessees will remain liable hereunder as herein provided,
calculated in accordance with Section 17.4). Upon any termination of
the right to possession of any one or more Lessees pursuant to the
previous sentence, the Lessor or its agents may peaceably enter upon
the premises of any Lessee or other premises where such Vehicles may be
located and take possession of them and thenceforth hold, possess and
enjoy the same free from any right of any Lessee, or its successors or
assigns, to employ such Vehicles for any purpose whatsoever consistent
with the mitigation of losses and damages, and the Lessor will,
nevertheless, have a right to recover from the applicable Lessee any
and all amounts which under the terms of Section 17.2 (as limited by
Section 17.4) of this Lease may be then due. The Lessor will provide
the Lessees with written notice of the place and time of any sale of
Financed Vehicles or Synthetic Lease Vehicles pursuant to this Section
17.3 at least five (5) days prior to the proposed sale, which notice
period shall be deemed commercially reasonable, and the Lessee may
purchase the 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 17.4.
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 any
Lessee will not otherwise alter or affect the rights of the Lessor or
the obligations hereunder of any Lessee. The acceptance by the Lessor
of any payment after it will have become due hereunder will not be
deemed to alter or affect the rights of the Lessor hereunder with
respect to any subsequent payments or defaults therein;
(iv) If a Lessee shall default in the due performance and
observance of any of its obligations under Section 10, 24.5, 24.6,
24.7(iv), 24.7(viii), 24.9, 24.11, 25.3 or 25.4 hereof, and such
default shall continue unremedied for a period of 30 days (other than
in
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the case of a default under Section 24.6, for which the period will be
10 days) after notice thereof shall have been given to the Lessee by
the Lessor or the Master Collateral Agent, then the Lessor shall have
the ability to exercise all rights, remedies, powers, privileges and
claims of such Lessee against the Manufacturers under or in connection
with the Manufacturer Programs with respect to (1) Series 1997 Vehicles
the Lessee has determined to turn back to the Manufacturers under such
Manufacturer Programs and (2) whether or not the Lessee shall then have
determined to turn back such Vehicles, any Series 1997 Vehicles for
which the applicable Repurchase Period will end within one month or
less;
(v) Upon a default in the performance (after giving effect to
any grace periods provided herein) by a Lessee of its obligations or
representations under Section 23.6 or 24.18 hereof with respect to any
Series 1997 Vehicle, the Lessor, the Master Collateral Agent or the
Trustee shall have the right to take actions reasonably necessary to
correct such default with respect to the subject Vehicle including the
execution of UCC-1 financing statements with respect to Manufacturer
Programs and other general intangibles and the completion of Vehicle
Perfection and Documentation Requirements on behalf of the Lessees or
the Lessor, as applicable;
(vi) Upon the occurrence of a Liquidation Event of Default,
each Servicer (or, in the case of a Liquidation Event of Default
resulting from an event referred to in Section 17.1.5 of this Lease
with respect to a Lessee, the Servicer in respect of which such event
has occurred), will return all Series 1997 Vehicles serviced by it
which are Program Vehicles to the related Manufacturer, in each case in
accordance with the instructions of the Lessor. Upon the occurrence of
a Series 1997 Limited Liquidation Event of Default, each Servicer will
return Series 1997 Vehicles serviced by it which are Program Vehicles
to the related Manufacturer and will otherwise dispose of NonProgram
Vehicles to the extent necessary to generate proceeds in an amount
sufficient to pay all interest on and principal of (and all other
amounts due to the holders of) the applicable Series 1997 Variable
Funding Notes and, if any, all other related Shared Collateral Series
Notes, in each case in accordance with the instructions of the Lessor.
To the extent any Manufacturer fails to accept any such Vehicles under
the terms of the applicable Manufacturer Program, the Lessor shall have
the right otherwise to dispose of such Vehicles and to direct the
applicable Servicer to dispose of such Vehicles in accordance with its
instructions. In addition, the Lessor shall have all of the rights,
remedies, powers, privileges and claims vis-a-vis each Lessee necessary
or desirable to allow the Trustee to exercise the rights, remedies,
powers, privileges and claims given to the Trustee pursuant to Sections
9.2 and 9.3 of the Base Indenture and each Lessee acknowledges that it
has hereby granted the Lessor all of the rights, remedies, powers,
privileges and claims granted to the Trustee pursuant to Article 9 of
the Base Indenture and that, under certain circumstances set forth in
the Base Indenture, the Trustee may act in lieu of the Lessor in the
exercise of such rights, remedies, powers, privileges and claims; and
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(vii) Upon the occurrence and during the continuation of a
Lease Event of Default, the Lessor by notice in writing to a Lessee,
may terminate the Power of Attorney as to such Lessee (provided that,
after any such termination of the Power of Attorney, the Lessor will
follow the direction of the applicable Servicer to release liens on
Acquired Vehicles which liens are required to be released under the
terms of this Lease).
Section 17.4. Measure of Damages. If a Lease Event of Default occurs
and the Lessor, the Master Collateral Agent or the Trustee exercises the
remedies granted to the Lessor, the Master Collateral Agent or the Trustee under
this Section 17 or under Section 9.2 of the Indenture, the amount that the
Lessor shall be permitted to recover shall be equal to:
(i) all Rent and other charges, payments and amounts owed
under this Lease (calculated as provided in Section 17.2); plus
(ii) any out-of-pocket damages and expenses which the Lessor,
the Master Collateral Agent or the Trustee shall have sustained by
reason of such Lease 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.
(iii) without duplication of payments made pursuant to Section
5.4, interest (calculated on the basis of a 360-day year) from time to
time on amounts due and unpaid under this Lease for each Interest
Period in the period from the date of the Lease Event of Default or the
date payments were originally due the Lessor under this Lease or from
the date of each expenditure by the Lessor, the Master Collateral Agent
or the Trustee, as applicable, which is recoverable from the Lessee
pursuant to this Section 17, as applicable, to and including the date
payments are made by the Lessee at a rate for each such Interest Period
equal to the VFR for such Interest Period (converted to a rate per
annum) plus 1%;
provided, however, that, to avoid duplication of payments, to the extent any
amounts described in (i) through (iii) above have been paid to the Lessor, the
Master Collateral Agent or the Trustee from the liquidation of the Financed
Vehicles and Synthetic Lease Vehicles leased hereunder (either by receipt of
payment from the Manufacturers under Manufacturer Programs, from sales of
Vehicles to third parties, or otherwise), such amounts shall be deducted from
amounts under this Section 17.4.
Section 17.5. Application of Proceeds. The proceeds of any sale or
other disposition of any Financed Vehicles or Synthetic Lease Vehicles pursuant
to Section 17.3 shall be applied in the following order: (i) to the reasonable
out-of-pocket costs and expenses incurred by the Lessor or its agent in
connection with such sale or disposition, including any reasonable costs
associated with repairing such Vehicles, and reasonable attorneys' fees in
connection with the enforcement of this Lease, (ii) to the payment of
outstanding Rent and other charges, payments and amounts
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under this Lease (such proceeds to be applied first, to outstanding Monthly
Variable Rent and Monthly Finance Rent pro rata, second, to outstanding Base
Rent, Monthly Supplemental Payments, Additional Base Rent and Additional
Synthetic Lease Payments, pro rata, third, to outstanding Termination Payments
and Casualty Payments pro rata and fourth, to outstanding late charges pursuant
to Sections 5.4 and 17.4(iii)), (iii) to the payment of all other amounts due
hereunder and (iv) any remaining proceeds to the applicable Lessee or such
Person as may be lawfully entitled thereto.
SECTION 18. MANUFACTURER EVENTS OF DEFAULT; LESSEE PARTIAL WIND-DOWN
EVENTS. (a) Upon the occurrence of a Manufacturer Event of Default with respect
to a Manufacturer, the Lessees on behalf of the Lessor (a) shall no longer place
Vehicle Orders for additional Vehicles from such Manufacturer (each, a
"Defaulting Manufacturer"); provided that, if such Defaulting Manufacturer
continues to be an Eligible Non-Program Manufacturer, then the Lessees may
continue to place Vehicle Orders for Non-Program Vehicles with such Defaulting
Manufacturer, and (b) shall cancel any Vehicle Order for Vehicles of such
Defaulting Manufacturer to which a vehicle identification number (a "VIN") has
not been assigned as of the date of such Manufacturer Event of Default (to the
extent such Vehicle Order is cancelable, with or without penalty); provided
that, if such Defaulting Manufacturer continues to be an Eligible Non-Program
Manufacturer, then the Lessees shall not be required to cancel Vehicle Orders
for Non-Program Vehicles of such Defaulting Manufacturer.
(b) Upon the occurrence of any of the events described in Section
17.1.2, 17.1.3, 17.1.4, 17.1.5, 17.1.8 or 17.1.9 (a "Lessee Partial Wind-Down
Event") with respect to any Lessee (such Lessee, the "Defaulting Lessee"), then
such Defaulting Lessee shall (a) no longer place Vehicle Orders for additional
Series 1997 Vehicles and (b) shall cancel Vehicle Orders for Series 1997
Vehicles; provided, however, that if a Vehicle Order has been placed for an
Acquired Vehicle and the related Manufacturer has assigned a VIN as of the date
such Lessee Partial Wind-Down Event occurs, then such 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 17.2 or 17.3 hereof and (ii) terminate
the Power of Attorney with respect to such Defaulting Lessee; provided that,
after any such termination of the Power of Attorney, the Lessor will follow the
direction of the applicable Servicer to release liens on Acquired Vehicles,
which liens are required to be released under the terms of this Lease.
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE. Pursuant to Section
7701 of the Code, each Lessee will deliver to the Lessor a certificate in the
form of Attachment C hereto, warranting and certifying that (1) such Lessee
intends to use the Acquired Vehicles leased by it hereunder in a trade or
business of the Lessee, and (2) such Lessee has been advised that it will not be
treated as the owner of the Acquired Vehicles leased by it hereunder for federal
income tax purposes.
SECTION 20. SURVIVAL. In the event that, during the term of this Lease,
a Lessee or the Guarantor becomes liable for the payment or reimbursement of any
obligations, claims or
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taxes pursuant to any provision hereof, such liability will continue,
notwithstanding the expiration or termination of this Lease, until all such
amounts are paid or reimbursed by the Lessee or the Guarantor.
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL AGENT AND
TRUSTEE. Notwithstanding anything to the contrary contained in this Lease, each
Lessee acknowledges that each of the Lessees and the Lessor, pursuant to the
Master Collateral Agency Agreement, has granted a security interest to the
Master Collateral Agent, for the benefit of the Trustee (for the benefit of the
Series 1997 Variable Funding Noteholders), in all of its right, title and
interest in, to and under the Series 1997 Vehicles, the related Manufacturer
Programs, the Master Collateral Account and all other Master Collateral
specified in the Master Collateral Agency Agreement as being pledged by any
Lessee or NFLP, and each Lessee and the Guarantor further acknowledges that the
Lessor, pursuant to the NFLP Receivables Trust Agreement has conveyed to the
NFLP Receivables Trustee, all NFLP's right, title and interest in respect of the
Lease Payments and the Manufacturer Payment Rights and that, pursuant to the
Series 1997 Variable Funding Supplements and the Indenture, the Lessor has
granted a security interest to the Trustee (for the benefit of the Series 1997
Variable Funding Noteholders) in all of its right, title and interest in, to and
under the NFLP Agreements (other than the Lease Payments, and the Manufacturer
Payment Rights), the NFLP Receivables Trust Agreement, the NFLP Beneficial
Interest, the VFN Collection Accounts and the other Series 1997 VFN Collateral
described in the Series 1997 Variable Funding Supplements. Accordingly, each
Lessee and the Guarantor agree that:
(i) Subject to the terms of the Indenture, the Trustee shall
have all the rights, powers, privileges and remedies of the Lessor
hereunder. Specifically, each Lessee and the Guarantor agrees that,
upon the occurrence of an Amortization Event, the Trustee or, with
respect to any Master Collateral, the Master Collateral Agent (for and
on behalf of the Trustee) may exercise any right or remedy available
upon the occurrence of the event or events giving rise to such
Amortization Event against any Lessee or the Guarantor provided for
herein or in the Indenture or the Master Collateral Agency Agreement,
as applicable, and neither any Lessee nor the Guarantor will interpose
as a defense that such claim should have been asserted by the Lessor;
(ii) Upon the delivery by the Master Collateral Agent or the
Trustee of any notice to a Lessee or the Guarantor stating that a Lease
Event of Default or any Amortization Event has occurred, then the
Lessee or the Guarantor, will, if so requested by the Master Collateral
Agent (with respect to the Master Collateral) or the Trustee (with
respect to the Series 1997 VFN Collateral), treat the Master Collateral
Agent or the Trustee, as the case may be, or the designee of the Master
Collateral Agent or the Trustee, as the case may be, for all purposes
as the Lessor hereunder and in all respects comply with all obligations
under this Lease that are asserted by the Master Collateral Agent or
the Trustee, as the case may be, as the successor to the Lessor
hereunder, irrespective of whether the Lessee or the Guarantor has
received any such notice from the Lessor;
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(iii) Each Lessee acknowledges that pursuant to the Indenture,
the Lessor has irrevocably authorized and directed the Lessees to, and
the Lessees shall, make payments of Rent and other charges and payments
under this Lease by deposit directly to the Series 1997 Collection
Account established by the Trustee for receipt of such payments
pursuant to the Indenture and the Series 1997 Variable Funding
Supplements (or to such other account as the Trustee may from time to
time specify to the Lessees), and such payments shall discharge the
obligation of the Lessees to the Lessor hereunder with respect to Rent
and other charges and payments to the extent of such payments;
(iv) Upon request made by the Master Collateral Agent at any
time, each Lessee will take such actions as are requested by the Master
Collateral Agent to maintain the Master Collateral Agent's perfected
first priority security interest in the Vehicles leased by such Lessee
under this Lease, the Certificates of Title with respect thereto and
the Master Collateral pursuant to the Master Collateral Agency
Agreement;
(v) The Trustee is hereby irrevocably appointed the true and
lawful attorney-in-fact of each Lessee, in its name and stead, to make
all necessary deeds, bills of sale and instruments of assignment and
transfer of the property of such Lessee sold pursuant to Section 9.3 of
the Base Indenture (including without limitation, any Financed Vehicles
and Synthetic Lease Vehicles), and for such other purposes as are
necessary or desirable to effectuate the provisions of the Indenture
and for that purpose the Trustee may execute and deliver all necessary
deeds, bills of sale and instruments of assignment and transfer, and
may substitute one or more Persons with like power, each Lessee hereby
ratifying and confirming all that its said attorney, or such substitute
or substitutes, shall lawfully do by virtue hereof, but if so requested
by the Trustee or by any purchaser, the Lessee shall ratify and confirm
any such sale or transfer by executing and delivering to the Trustee or
to such purchaser all such property, deeds, bills of sale, instruments
of assignment and transfer and releases as may be designated in any
such request;
(vi) In the event that the Trustee determines to take action
pursuant to the provisions of Section 9.2(e) of the Base Indenture, the
Trustee may, without notice to the Lessor (unless such notice is
required by applicable state law), any Servicer, any Lessee or the
Guarantor, direct the Master Collateral Agent to take legal proceedings
for the appointment of a receiver to take possession of Series 1997
Vehicles pending the sale thereof and in any such event the Trustee
shall be entitled to the appointment of a receiver for the Series 1997
Vehicles, and none of the Lessor, any Servicer, any Lessee or the
Guarantor shall object to such appointment; and
(vii) Each Lessee hereby authorizes the Lessor and the
Trustee, as applicable, to give directions to the Master Collateral
Agent to perform any obligation which the Lessee shall have failed to
perform under the Related Documents, including, but not limited to, any
directions permitted by Section 3.4 of the Master Collateral Agency
Agreement.
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SECTION 22. MODIFICATION AND SEVERABILITY. No delay on the part of the
Lessor, the Trustee or the Master Collateral Agent in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial exercise by any of them of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Lease shall in any event be effective unless (a) the same
shall be in writing and signed and delivered by the Lessor, the Lessees, and
(except as to the matters referred to in Section 28.3) the Guarantor, and
consented to in writing by the Trustee, Required VFN Noteholders and the
Majority Credit Enhancers, and (b) the Lessor shall have received in writing
confirmation from each of the Rating Agencies that its then current rating with
respect to any Commercial Paper Notes will not be reduced or withdrawn as a
result thereof.
Notwithstanding the foregoing provisions of this Section 22, the
Lessor, the Lessees and the Guarantor may, at any time and from time to time,
without the consent of the Trustee or the Series 1997 Variable Funding
Noteholders, enter into any amendment, supplement or other modification to this
Lease to cure any apparent ambiguity or to correct or supplement any provision
in this Lease 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 the providers of Enhancement for any Series 1997
Variable Funding Notes or the Series 1997 Variable Funding Noteholders as set
forth, at the request of the Trustee, in an Opinion of Counsel and a certificate
of the Lessor and Lessees 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 Series 1997 Variable Funding Notes and
each Rating Agency in accordance with the notice provisions hereof not later
than ten days prior to the execution thereof by the Lessor, the Lessees and the
Guarantor.
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES. Each Lessee and
Servicer represents and warrants to the Lessor, as to itself and the Series 1997
Vehicles leased by it, and the Guarantor represents and warrants to the Lessor
as to itself and as to each Lessee and Servicer and as to all Series 1997
Vehicles, that, as of the VFN Closing Date and, except to the extent such
representation and warranty expressly relates to an earlier date, (i) as of each
Vehicle Funding Date and (ii) as of the Closing Date with respect to each Series
of Shared Collateral Series Notes):
Section 23.1. Organization; Power; Qualification. The Guarantor and
each Lessee (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted, and (iii) is duly
qualified, in good standing and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its businesses
requires such qualification or authorization, except where the failure to so
qualify is not reasonably likely to have a Material Adverse Effect.
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Section 23.2. Authorization; Enforceability. The Guarantor and each
Lessee (in its capacities as Lessee and as Servicer) has the corporate power and
has taken all necessary corporate action to authorize it to execute, deliver and
perform this Lease and each of the other Related Documents to which it is a
party in accordance with their respective terms, and to consummate the
transactions contemplated hereby and thereby. This Lease has been duly executed
and delivered by the Guarantor and each Lessee and is, and each of the other
Related Documents to which any Lessee or the Guarantor is a party is, a legal,
valid and binding obligation of such Lessee or the Guarantor, as applicable,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and similar laws
affecting creditors generally and by the availability of equitable remedies.
Section 23.3. Compliance. The execution, delivery and performance, in
accordance with their respective terms, by each Lessee (in its capacities as a
Lessee and as a Servicer) and the Guarantor of this Lease and each of the other
Related Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
any consent, approval, authorization or registration not already obtained or
effected, except where the failure to obtain any such consent, approval or
authorization or to register is not reasonably likely to have a Material Adverse
Effect, (ii) violate any applicable law with respect to any Lessee, Servicer or
the Guarantor or otherwise, as applicable, which violation is reasonably likely
to have a Material Adverse Effect, (iii) conflict with, result in a breach of,
or constitute a default under the certificate of incorporation or by-laws of any
Lessee, Servicer or the Guarantor, or under any indenture, agreement, or other
instrument to which any Lessee (in its capacity as Lessee or as Servicer or
otherwise) or the Guarantor, is a party or by which its properties may be bound,
which conflict, breach or default is reasonably likely to have a Material
Adverse Effect, or (iv) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by the
Guarantor or any Lessee, except Permitted Encumbrances.
Section 23.4. Financial Information; Financial Condition. All
financial statements (including the notes thereto) referred to in the following
sentence and hereafter furnished to the Lessor, the Master Collateral Agent or
the Trustee pursuant to Section 24.7 hereof 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, subject, in the case of all
unaudited statements, to normal year-end adjustments and lack of footnotes and
other presentation items. Such financial statements include the audited
consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries as
of December 31, 1996 (restated as of August 19, 1997) and the related statements
of income, changes in stockholders' equity and cash flow as of and for the
fiscal year ending on such date, which have been furnished to the Lessor and the
Trustee on or prior to the date hereof.
Section 23.5. Litigation. Except for claims as to which the insurer
has admitted coverage in writing and which are fully covered by insurance, no
claims, litigation (including, without limitation, derivative actions),
arbitration, governmental investigation or proceeding or inquiry is
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pending or, to the best of the Guarantor's and the Lessee's knowledge,
threatened against the Guarantor or any Lessee which is reasonably likely to
have a Material Adverse Effect.
Section 23.6. Liens. The Series 1997 Vehicles and other Master
Collateral are free and clear of all Liens other than Permitted Liens. The
Lessor (or the Master Collateral Agent on behalf of the Lessor) has obtained, as
security for the liabilities of the Lessees under this Lease, a first priority
perfected security interest on all Series 1997 Vehicles and all the other Master
Collateral with respect to which the Trustee (for the benefit of the Series 1997
Variable Funding Noteholders) or any Other VFN Beneficiary is designated as the
Beneficiary under the Master Collateral Agency Agreement. All Vehicle Perfection
and Documentation Requirements with respect to all Series 1997 Vehicles (other
than Series 1997 Vehicles in the Initial Fleet) on or after the date hereof have
and will continue to be satisfied, except to the extent that the failure to
comply with such requirements does not, in the aggregate, materially adversely
affect either the interests of the Lessor or Series 1997 Variable Funding
Noteholders under this Lease or the Indenture or the likelihood of payment of
all Rent and other charges and payments due under this Lease.
Section 23.7. Employee Benefit Plans. (a): (i) During the twelve
consecutive month period prior to the date hereof and prior to the VFN Closing
Date, each Vehicle Funding Date and the Closing Date for each Series of Shared
Collateral Series Notes, no steps have been taken by the Guarantor, any Lessee,
or any member of the Controlled Group, or to the knowledge of the Guarantor or
any Lessee, by any Person, to terminate any Pension Plan that could give rise to
any liability under Title IV of ERISA and (ii) no contribution failure has
occurred or exists with respect to any Pension Plan maintained or previously
maintained by the Guarantor, any Lessee, or any member of the Controlled Group
sufficient to give rise to a Lien under Section 302(f)(1) of ERISA in connection
with such Pension Plan; and (b) no condition exists or event or transaction has
occurred with respect to any Pension Plan which could reasonably be expected to
result in the incurrence by the Guarantor, any Lessee, or any member of the
Controlled Group of liabilities (including, without limitation, Multiemployer
Plan and Multiple Employer Plan withdrawal liabilities), fines or penalties in
an amount that will have a Material Adverse Effect.
Section 23.8. Securities Laws. 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, and the entering into or
performance by the Guarantor and the Lessees of this Lease does not violate any
provision of such Act and does not require any consent, approval or
authorization of, or registration with, the Securities and Exchange Commission
or any other similar governmental or public body or authority.
Section 23.9. Regulations G, T, U and X. Neither the Guarantor nor any
Lessee is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System). Neither the Guarantor nor any Lessee nor any
Person acting on behalf of any of them has taken or will take action to cause
the execution, delivery or performance of this Lease or the financing or
acquisition of the Series
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1997 Vehicles to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
Section 23.10. Business Locations; Trade Names. Schedule 23.10 lists
where each Lessee and the Guarantor maintains its chief executive office,
principal place of business, and location of its consolidated business and
financial records as of the VFN Closing Date; and Schedule 23.10 also lists as
of the VFN Closing Date the legal name of each Lessee and the Guarantor and each
name under or by which each Lessee and the Guarantor conducts its business and
each state in which any Lessee or the Guarantor conducts business.
Section 23.11. Taxes. The Guarantor and each Lessee has filed all
material tax returns which have been required to be filed by it, and has paid or
provided in all material respects adequate reserves for the payment of all
taxes, including, without limitation, all payroll taxes and federal and state
withholding taxes, and all assessments payable by it that have become due, other
than those that are not yet delinquent or that 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 VFN
Closing Date, there is no ongoing audit (other than routine audits) or, to the
Guarantor's or any Lessee's knowledge, other governmental investigation of the
tax liability of the Guarantor or any Lessee and there is no unresolved claim by
a taxing authority concerning the Guarantor's or any Lessee's tax liability for
any period for which returns have been filed or were due other than those
contested in good faith by appropriate proceedings and with respect to which, in
all material respects, adequate reserves have been established, and are being
maintained, in accordance with GAAP.
Section 23.12. Governmental Authorizations. 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 is not reasonably likely to have a Material Adverse
Effect.
Section 23.13. Absence of Default. The Guarantor and each Lessee is in
compliance with all of the provisions of its certificate of incorporation and
by-laws and no event has occurred or failed to occur which has not been remedied
or waived, the occurrence or non-occurrence of which constitutes (i) a Lease
Event of Default or Potential Lease Event of Default, or (ii) an event of
default by the Guarantor and each Lessee, under any material indenture,
agreement or other instrument (other than the Related Documents) that is
reasonably likely to have a Material Adverse Effect, and neither the Guarantor
nor any Lessee is subject to any judgment, decree or final order pursuant to
which the Guarantor and each Lessee, or any of their respective properties may
be bound or affected that is reasonably likely to have a Material Adverse
Effect.
Section 23.14. Compliance with Requirements of Law. The Guarantor and
each Lessee: (i) are not in violation of any law, ordinance, rule, regulation or
order of any Governmental Authority applicable to it or its property (other than
Environmental Laws, which are separately addressed in Section 23.18 hereof),
which violation is reasonably likely to have a Material
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Adverse Effect, and no such violation has been alleged, (ii) have filed in a
timely manner all reports, documents and other materials required to be filed by
it with any governmental bureau, agency or instrumentality (and the information
contained in each of such material filings is true, correct and complete in all
material respects), except where failure to make such filings is not reasonably
likely to have a Material Adverse Effect and (iii) have retained all records and
documents required to be retained by it pursuant to any Requirement of Law,
except where failure to retain such records is not reasonably likely to have a
Material Adverse Effect.
Section 23.15. Eligible Vehicles; Fleet Sharing Parties. Each Vehicle
is or will be, on the Vehicle Funding Date therefor hereunder, an Eligible
Vehicle, and each party sharing a Vehicle with the Lessor is or will be, as the
case may be, a Fleet Sharing Party on the date that the Fleet Sharing Agreement
applicable to such Vehicle commences.
Section 23.16. Title to Assets. The Guarantor and each Lessee has good,
legal and marketable title to, or a valid leasehold interest in, all of its
assets, except to the extent no Material Adverse Effect is reasonably likely to
result. The assets of the Guarantor and each Lessee are in reasonably good
repair and operating condition (subject to normal wear and tear and normal
course reserves and accruals), except to the extent no Material Adverse Effect
is likely to result.
Section 23.17. Accuracy of Information. All certificates, reports,
statements, documents and other information furnished to the Lessor, the Trustee
or the Master Collateral Agent 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, the Trustee or the Master
Collateral Agent, as the case may be, true and accurate knowledge of the subject
matter thereof, and the furnishing of the same to the Lessor, the Trustee or the
Master Collateral Agent, as the case may be, shall constitute a representation
and warranty by the Guarantor and the Lessee made on the date the same are
furnished to the Lessor, the Trustee or the Master Collateral Agent, as the case
may be, to the effect specified herein.
Section 23.18. Environmental Matters. (a) The Guarantor and each
Lessee, to its knowledge, is in compliance with all Environmental Laws, except
where the failure to comply would not reasonably be expected to have a Material
Adverse Effect.
(b) The Guarantor and each Lessee, to its knowledge, has obtained and
is in compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental Laws for the occupation of its facilities and
the operation of its business, except for such failure to obtain or comply
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
(c) The Guarantor and each Lessee, to its knowledge, has not, since the
VFN Closing Date, received any written notice, claim, demand, report or other
information that it has not
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provided to the Lessor, the Trustee and each Rating Agency regarding any
violation by the Guarantor or any Lessee of, or liabilities of the Guarantor or
any Lessee under, Environmental Laws (including without limitation liability for
investigatory costs, cleanup or remediation or removal costs, governmental
response costs, natural resource damages, property damage, personal injury,
fines, or penalties arising out of or relating to the presence, discharge,
emission, release or threatened release of any Hazardous Substances at any
location), except for any such violation or liability that would not reasonably
be expected to have a Material Adverse Effect.
(d) Neither the Guarantor nor any Lessee has entered into, has agreed
to, or is subject to any judgment, decree, or order under any Environmental Law,
including without limitation relating to compliance or to investigation,
cleanup, remediation or removal of Hazardous Substances, which judgment, decree,
or order would reasonably be expected to have a Material Adverse Effect.
Section 23.19. Burdensome Provisions. Neither the Guarantor nor any
Lessee is a party to or bound by any Contractual Obligation that is reasonably
likely to have a Material Adverse Effect.
Section 23.20. Solvency. Neither the Guarantor nor any Lessee is
insolvent (as such term is defined in the Bankruptcy Code), and the Guarantor
and each Lessee has adequate capital or assets to carry on its businesses, and
intends to and believes that it will be able to pay its debts as such debts
become due.
Section 23.21. Ownership. All partnership interests in the Lessor, or
stock of the General Partner, owned by the Guarantor or any Lessee are owned
free and clear of all Liens.
Section 23.22. Necessary Actions. Upon the applicable Servicer causing
the Lien of the Master Collateral Agent to be noted on the Certificates of Title
with respect to the Vehicles or as otherwise provided for by the Master
Collateral Agency Agreement or the Indenture, all filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted to the Master Collateral Agent in respect of the
Master Collateral have been accomplished and the security interest granted to
the Master Collateral Agent pursuant to the Master Collateral Agency Agreement
in and to the Master Collateral constitutes a perfected security interest
therein prior to the rights of all other Persons therein and subject to no other
Liens other than Permitted Liens and is entitled to all rights, priorities and
benefits afforded to perfected security interests by the UCC or other relevant
law as enacted in any relevant jurisdiction.
Section 23.23. Supplemental Documents True and Correct. All information
contained in any Vehicle Order or any other material Supplemental Document which
has been submitted, or which may hereafter be submitted by the Guarantor or any
Lessee to the Lessor is, or will be, true, correct and complete in all material
respects.
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Section 23.24. Initial Vehicles. As of the VFN Closing Date, there are
no Initial Vehicles that are part of the Refinanced Vehicles.
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS. Each Lessee and, as
applicable, each Servicer and the Master Servicer, covenants and agrees that,
until the expiration or termination of this Lease, and thereafter until the
obligations of such Lessee and such Servicer under this Lease and the Related
Documents are satisfied in full, unless at any time the Lessor, the Master
Collateral Agent (solely in respect of Sections 24.2, 24.3, 24.4 (as it relates
to keeping adequate books and records of account in which complete entries will
be made), 24.6, clauses (iii) through (viii) of Section 24.7 and Sections 24.8,
24.12, 24.13, 24.14 and 24.18) and the Trustee shall otherwise expressly consent
in writing, it will:
Section 24.1. Corporate Existence; Foreign Qualification. Do and cause
to be done at all times all things necessary to (i) maintain and preserve its
corporate existence and corporate power and authority to own its properties and
to carry on its business, (ii) be 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 except where the failure to so
qualify is not reasonably likely to have a Material Adverse Effect and (iii)
comply with all Contractual Obligations and Requirements of Law binding upon it,
except to the extent that the failure to comply therewith is not reasonably
likely to, in the aggregate, have a Material Adverse Effect.
Section 24.2. Books, Records and Inspections. (i) Maintain complete and
accurate books and records with respect to Vehicles leased under this Lease and
the other Master Collateral; (ii) at any time and from time to time during
regular business hours, upon not less than reasonable prior notice from the
Lessor, the Master Collateral Agent or the Trustee, permit the Lessor, the
Master Collateral Agent or the Trustee (or such other person who may be
designated from time to time by the Lessor, the Master Collateral Agent or the
Trustee), or its agents or representatives to examine and make copies of such
books, records and documents in the possession or under the control of the
Lessee relating to the Vehicles leased under this Lease and the other Master
Collateral as the Lessor, the Master Collateral Agent, the Trustee, or such
person may reasonably request (including in connection with the Lessor's, the
Trustee's or the Master Collateral Agent's satisfaction of any requests of a
Manufacturer performing an audit under its Manufacturer Program); (iii) permit
the Lessor, the Master Collateral Agent or the Trustee to visit the office
(which office shall be in the continental United States and, if it is not the
office where such materials normally are kept, shall be accessible without
unreasonable effort or expense) and properties of the Lessee, Servicer or Master
Servicer for the purpose of examining such materials, and to discuss matters
relating to the Vehicles leased under this Lease and the other Master
Collateral or the Lessee's (or the Servicer's or Master Servicer's) performance
under this Lease with the Lessee's or Master Servicer's independent public
accountants or with any of the officers or employees of the Lessee or the
Master Servicer having knowledge of such matters; (iv) permit the Lessor, the
Master Collateral Agent or the Trustee or any authorized representative of the
Lessor, the Master Collateral Agent or the Trustee, during reasonable business
hours from time to time, upon reasonable prior notice, without disruption of
the Lessees' or the Fleet Sharing Parties' business and subject to applicable
law, to inspect Series
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1997 Vehicles and registration certificates, Certificates of Title and related
documents covering Series 1997 Vehicles wherever the same may be located; and
(v) make reasonable efforts to confirm to the Lessor, the Master Collateral
Agent and the Trustee the location, mileage and condition of each Vehicle and to
make available for the Lessor's, the Master Collateral Agent's or the Trustee's
inspection (such inspection to be conducted without disturbing the ordinary
conduct of such Lessee's business) within a reasonable time period, not to
exceed forty-five (45) days, the Vehicles at the location where the Vehicles are
normally domiciled; provided, however, that in the case of clauses (ii), (iii)
and (iv) above, any of the Master Collateral Agent and the Trustee and/or their
agents or representatives, as applicable, examining any such material shall
perform such examination at the same time as the other such parties performing
such examination of such material.
Section 24.3. Maintenance of Properties. Maintain or cause to be
maintained (i) in the ordinary course of business in good repair, working order
and condition (reasonable wear and tear excepted) all properties, including,
without limitation, vehicles necessary for the operation of its businesses, and
from time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements, additions, betterments, and improvements thereto, except
to the extent no Material Adverse Effect is reasonably likely to result, and
(ii) good, legal and marketable title to, or a valid leasehold interest in, all
of its assets other than in the case of any Vehicles or other assets that, in
the aggregate, are immaterial.
Section 24.4. Accounting Methods; Financial Records. Maintain, and
cause its material Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP, keep, and cause its material
Subsidiaries to keep, adequate records and books of account in which complete
entries will be made in accordance with such accounting principles and
reflecting all transactions required to be reflected by such accounting
principles and keep, and cause its material Subsidiaries to keep, accurate and
complete records of their respective properties and assets.
Section 24.5. Insurance. (a) Maintain or cause to be maintained, with
financially sound and reputable insurers satisfactory to the Lessor and the
Trustee, (i) personal injury and damage insurance (including self-insurance)
with respect to the Vehicles and (ii) insurance with respect to its properties
and business against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations and the Guarantor
and each Lessee shall, from time to time, deliver to the Lessor and the Trustee
(as the Lessor or the Trustee shall request), copies of certificates describing
all insurance then in effect; provided, however, that any Lessee may continue
its current practices of self-insurance setting aside adequate reserves to cover
any and all losses: (x) which would otherwise be covered under any standard
comprehensive and collision policies of insurance; and (y) arising from
liability to third parties for bodily injuries, death, and property damage in
an aggregate amount reasonably determined by such Lessee and not less than that
which is customary for companies of a similar size or engaged in the same or
similar activities; provided, further, however, that the Lessees shall obtain
excess insurance
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coverage in an amount not less than Thirty Million Dollars ($30,000,000) for any
claims of liability against the Lessees relating to their ownership or use of
vehicles.
(b) Require that each insurance policy referred to in the foregoing
clause (a) provide for at least thirty (30) days' prior written notice to the
Master Collateral Agent of any termination of or proposed cancellation or
nonrenewal of such policy and that each insurance policy insuring assets pledged
to the Master Collateral Agent name the Master Collateral Agent as an additional
insured or additional loss payee, as appropriate, pursuant to certificates in
form and substance reasonably satisfactory to the Master Collateral Agent.
Section 24.6. Manufacturer Programs. Turn in each Program Vehicle
leased by a Lessee hereunder to the relevant Manufacturer within the Repurchase
Period therefor pursuant to Section 12.2. (unless the Lessee (i) sells such
Vehicle pursuant to Section 27 and, prior to the end of the Repurchase Period
therefor, causes to be deposited to the Master Collateral Account the sales
proceeds therefor in cash in the amount required pursuant to such Section, (ii)
purchases such Vehicle as permitted by, and pursuant to the requirements of,
this Lease and, prior to the end of the Repurchase Period therefor, deposits to
the Series 1997 Collection Account the purchase price therefor in cash in the
amount so required, (iii) in the case of any Series 1997 Vehicle that becomes a
Casualty or ceases to be an Eligible Vehicle, deposits to the Series 1997
Collection Account the Casualty Payment therefor in cash pursuant to Section 7
or (iv) redesignates such Vehicle as a Non-Program Vehicle in accordance with
Section 14); and, with respect to each Program Vehicle leased by the Lessee
hereunder, comply in all material respects with all of its obligations under the
Manufacturer Program relating to such Vehicle.
Section 24.7. Reporting Requirements. Except as otherwise specified
below, furnish, or cause to be furnished to the Lessor, the Master Collateral
Agent, each Support Credit Enhancer and the Trustee and, in the case of items
(i), (ii), (iii)(b), (vi) and (x) below, each Rating Agency, and, in the case of
items (i), (ii), (iii), (vi), (viii) and (xi), any Holder of any Series 1997
Variable Funding Note that has delivered to the Lessor a written request for
same:
(i) Audit Report. As soon as available and in any event within
one hundred and twenty (120) days after the end of each fiscal year of
the Guarantor, (x) consolidated financial statements consisting of a
balance sheet of the Guarantor and its Subsidiaries as at the end of
such fiscal year and statements of income, stockholders' equity and
cash flows of the Guarantor and its Subsidiaries for such fiscal year,
setting forth in comparative form the corresponding figures for the
preceding fiscal year (if applicable), certified by and containing an
opinion, unqualified as to scope, of Xxxxxx Xxxxxxxx L.L.P. or other
independent certified public accountants of nationally recognized
standing selected by the Guarantor and acceptable to the Lessor and the
Trustee, and (y) an Officer's Certificate of the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of Republic, addressed to the Lessor, the Trustee
and the Master Collateral Agent stating that, such officer has
reviewed the books and records of the Guarantor and its Subsidiaries,
and certifying that no Potential Lease Event of Default or Lease Event
of Default has occurred which was continuing at
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the close of such fiscal year or on the date of such Officer's
Certificate or, if such an event has occurred and was continuing at the
close of such fiscal year or on the date of such Officer's Certificate,
the nature of such event;
(ii) Quarterly Statements. As soon as available and in any
event within sixty (60) days after the end of each of the first three
quarters of each fiscal year of the Guarantor, (x) financial statements
consisting of consolidated balance sheets of the Guarantor and its
Subsidiaries as at the end of such quarter and statements of income,
stockholders' equity and cash flows of the Guarantor and its
Subsidiaries for each such quarter, setting forth in comparative form
the corresponding figures for the corresponding periods of the
preceding fiscal year (if applicable), all in reasonable detail and
certified (subject to normal year-end audit adjustments) by a senior
financial officer of the Guarantor as having been prepared in
accordance with GAAP, and (y) a letter from such officer addressed to
the Lessor, the Trustee and the Master Collateral Agent stating that no
Potential Lease Event of Default or Lease Event of Default has come to
his attention which was continuing at the end of such quarter or on the
date of his letter, or, if such an event has come to his attention and
was continuing at the end of such quarter or on the date of his letter,
indicating the nature of such event and the action which the Guarantor
proposes to take with respect thereto;
(iii) Lease Events of Default; Amortization Events. Promptly
after becoming aware thereof, (a) notice of the occurrence of any
Potential Lease Event of Default or Lease Event of Default, together
with a written statement of an Authorized Officer of the Lessee
describing such event and the action that the Guarantor or the
applicable Lessee proposes to take with respect thereto, and (b) notice
of any Potential Amortization Event or Amortization Event;
(iv) Monthly Vehicle Statements. To the Master Collateral
Agent, on or before each Determination Date, the Master Servicer shall
deliver a monthly vehicle statement (each, a "Monthly Vehicle
Statement") which shall specify (i) the last eight digits of the VIN
for each Series 1997 Vehicle leased hereunder during the Related Month
by each Lessee, (ii) whether such Vehicle is leased under Annex A,
Annex B or Annex C hereto, (iii) the Capitalized Cost for each such
Vehicle and (iv) the aggregate Net Book Value of such Vehicles as of
the end of the Related Month;
(v) Daily Reports. To the Master Collateral Agent, within one
Business Day after a request for any Daily Report (as defined below) is
made by the Master Collateral Agent, the Master Servicer shall deliver
a copy of such Daily Report. On each Business Day commencing on the
Lease Commencement Date, the Master Servicer shall prepare and maintain
at its office a record (each, a "Daily Report") setting forth the
aggregate of the amounts deposited in the Collection Account on the
immediately preceding Business Day, which shall consist of: (A) the
aggregate amount of payments received from Manufacturers and/or auction
dealers under Manufacturer Programs related to the Series 1997 Vehicles
and deposited in the Collection Account from the Master Collateral
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Account or otherwise, plus (B) the aggregate amount of proceeds
received from third parties (other than Manufacturers and auction
dealers) with respect to the sale of Series 1997 Vehicles and deposited
in the Collection Account from the Master Collateral Account or
otherwise, plus (C) the aggregate amount of other Collections deposited
in the VFN Collection Account;
(vi) Monthly Certificate. On or before each Determination
Date, an Officer's Certificate of the Master Servicer substantially in
the form of Exhibit A (each, a "Monthly Certificate") setting forth,
inter alia, the following information (which, in the cases of clauses
(c), (d) and (e) below, will be expressed as a dollar amount per $1,000
of the original principal amount of the applicable Series of Series
1997 Notes and as a percentage of the outstanding principal balance of
the Notes as of such date): (a) the aggregate amount of payments
received in respect of Series 1997 Vehicles from the Manufacturers
and/or auction dealers under Manufacturer Programs and the aggregate
amount of payments received from third parties (other than
Manufacturers and auction dealers) with respect to the sale of Series
1997 Vehicles and deposited in the Collection Account from the Master
Collateral Account or otherwise and the aggregate amount of other
Collections deposited in the Collection Account; (b) the Invested
Percentage with respect to Principal Collections and with respect to
Interest Collections on the last day of the Related Month of each
Series of the Series 1997 Variable Funding Notes and, if any, each
other Series of Shared Collateral Series Notes and each class of each
Series of Shared Collateral Series Notes; (c) for each Series of the
Series 1997 Variable Funding Notes and, if any, each other Series of
Shared Collateral Series Notes and each class of each Series of Shared
Collateral Series Notes, the total amount to be distributed to
Noteholders of such Series on the next succeeding Distribution Date;
(d) for each Series of the Series 1997 Variable Funding Notes and, if
any, each other Series of Shared Collateral Series Note and each class
of each Series of Shared Collateral Series Notes, the amount of such
distribution allocable to principal on the Notes; (e) for each Series
of the Series 1997 Variable Funding Notes and, if any, each other
Series of Shared Collateral Series Notes and each class of each Series
of Shared Collateral Series Notes, the amount of such distribution
allocable to interest on the Notes; (f) for each Series of the Series
1997 Variable Funding Notes and, if any, each other Series of Shared
Collateral Series Notes and each class of each Series of Shared
Collateral Series Notes, the amount of Enhancement used or drawn in
connection with the distribution to Noteholders of such Series or class
on the next succeeding Distribution Date, together with the aggregate
amount of remaining Enhancement not theretofore used or drawn; (g) for
each Series of the Series 1997 Variable Funding Notes and, if any, each
other Series of Shared Collateral Series Notes, the Series Monthly
Servicing Fee for the next succeeding Payment Date; (h) for each other
Series, if any, of Shared Collateral Series Notes and each class of
each Series of Shared Collateral Series Notes, the existing Carryover
Controlled Amortization Amount, if any; (i) the Series 0000 Xxxxxxxxx
Asset Amount and the amount of the Series 1997 Asset Amount Deficiency,
if any, at the close of business on the last day of the Related Month;
(j) if Enhancement is provided for any other Series, if any, of Shared
Collateral Series Notes or any class of a Series of Shared
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Collateral Series Notes by means of overcollateralization, the amount
of recoveries and losses for the Related Month, whether an Enhancement
Deficiency exists with respect to such Series or class and the amount
thereof, or the amount available for such overcollateralization; (k)
whether, to the knowledge of the Master Servicer, any Lien exists on
any of the Master Collateral or Series 1997 Collateral (other than
Liens granted pursuant to the Indenture and the other Related Documents
or permitted thereunder) which is reasonably likely to have a Material
Adverse Effect ; (l) the Series 1997 Program Percentage as of the end
of the Related Month; (m) the Series 1997 NonProgram Percentage as of
the end of the Related Month; (n) with respect to each Manufacturer,
the percentage of all Series 1997 Vehicles as of the end of the Related
Month which were Program Vehicles manufactured by such Manufacturer;
(o) with respect to each Manufacturer, the percentage of all Series
1997 Vehicles as of the end of the Related Month which were Non-Program
Vehicles manufactured by such Manufacturer; and (p) a list of each
Additional Lessee that became a party to this Lease during the Related
Month;
(vii) Non-Program Vehicle Report. On a semi-annual basis
commencing March 31, 1998, or as otherwise agreed by Standard & Poor's,
the Master 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 Standard & Poor's) to furnish a
report (the "Non-Program Vehicle Report") to the Rating Agencies, with
a copy furnished to the Lessor and the Trustee, to the effect that they
have performed certain agreed upon procedures, specifically (i)
compared the procedures related to the calculation of Disposition
Proceeds and Termination Payments obtained from the sale or other
disposition of Non-Program Vehicles (other than Casualties) sold or
otherwise disposed of during each Related Month to those procedures
outlined in the Related Documents and compared the results of such
procedures to the corresponding amounts set forth in the Daily Reports
prepared by the Master Servicer pursuant to Section 24.7(v), (ii)
compared the procedures related to the calculation of the Measurement
Month Average for each Measurement Month in such period to those
procedures outlined in the Related Agreements and compared the results
of such procedures with the corresponding amounts set forth in the
Monthly Certificate prepared by the Master Servicer pursuant to Section
24.7(vi) and (iii) compared the procedures related to the calculation
of the Net Book Value of Series 1997 Vehicles which are Non-Program
Vehicles for the Related Month to those procedures outlined in the
Related Documents and compared the results of such procedures to the
amounts set forth in the Monthly Certificate prepared by the Master
Servicer, and that on the basis of such comparisons referenced in (i),
(ii) and (iii) such accountants are reporting that (a) the procedures
are in compliance with the requirements of the Related Documents and
(b) the results of such procedures are in agreement with the amounts
set forth in the various reports provided by the Master Servicer, in
each case except for such exception resulting in a discrepancy of no
more than 5% in a reported dollar amount and such other exceptions as
shall be set forth in such Non-Program Vehicle Report;
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(viii) Manufacturers. Promptly after obtaining actual
knowledge thereof, notice of any Manufacturer Event of Default or
termination or replacement of a Manufacturer Program or prospective
change in any Manufacturer Program;
(ix) Litigation. Promptly after becoming aware thereof,
notice of any claims, litigation, arbitration, governmental
investigation or proceeding or inquiry that is pending or, to the best
of the Guarantor's or any Lessee's knowledge, threatened against the
Guarantor or any Lessee which is reasonably likely to have a Material
Adverse Effect;
(x) ERISA. Promptly after becoming aware thereof, notice of
(x) the termination of any Pension Plan; (y) the failure to make a
contribution to any Pension Plan maintained by the Guarantor, any
Lessee or any member of the Controlled Group sufficient to give rise to
a Lien under Section 302(f)(1) of ERISA; and (z) the existence or
occurrence of a condition, event or transaction with respect to any
Pension Plan which could reasonably be expected to result in the
incurrence by the Guarantor, any Lessee or any member of the Controlled
Group of liabilities, fines or penalties in an amount that is
reasonably likely to have a Material Adverse Effect;
(xi) Notice of Final Judgement. Promptly, provide to
Moody's notice of any final judgement rendered against the Lessor; and
(xii) Other. Promptly, from time to time, such other
information, documents, or reports respecting the Series 1997 Vehicles
or the other Master Collateral or the condition, financial or
otherwise, or operations of the Guarantor, the Lessees, the Master
Servicer or the Servicers as the Lessor, the Master Collateral Agent
or the Trustee may from time to time reasonably request in order to
protect the interests of the Lessor, the Master Collateral Agent or
the Trustee under or as contemplated by this Lease or any other
Related Document.
Section 24.8. Taxes and Liabilities. Pay when due all material taxes,
assessments and other material (determined on a consolidated basis) liabilities
(including titling fees and registration fees payable with respect to Vehicles)
except as contested in good faith and by appropriate proceedings with respect to
which in all material respects adequate reserves have been established, and are
being maintained, in accordance with GAAP and such nonpayment is not reasonably
likely to result in a Material Adverse Effect.
Section 24.9. Maintenance of the Vehicles. (i) Maintain and cause to be
maintained in good repair, working order, and condition all of the Series 1997
Vehicles in accordance with its ordinary business practices with respect to all
other vehicles owned by it and will use commercially reasonable efforts to
maintain each such Vehicle that is a Program Vehicle as an eligible vehicle
under the related Manufacturer Program, except in each case to the extent that
any such failure to comply with such requirements is not reasonably likely to,
in the aggregate, materially adversely affect the interests of the Lessor, the
Master Collateral Agent, any Support Credit Enhancer or the Trustee in, to and
under this Lease, the Master Collateral Agency Agreement and its supplements and
addenda, the Indenture and the Series 1997 Variable Funding Supplements, or the
likelihood of the Lessee's payment of its obligations hereunder and (ii) perform
all of its obligations as Servicer as set forth in the Master Collateral Agency
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Agreement and its supplements and addenda, the Indenture and the Series 1997
Variable Funding Supplements, or the likelihood of the Lessee's payment of its
obligations hereunder and (ii) perform all of its obligations as Servicer as set
forth in the Master Collateral Agency Agreement.
Section 24.10. Maintenance of Separate Existence. (i) Maintain in place
all policies and procedures, and take and continue to take all actions,
described in the factual assumptions set forth in that certain opinion letter
issued by Xxxxx, Xxxxx & Xxxxx, dated October 29, 1997 addressing the issue of
substantive consolidation as it may relate to the Guarantor, the Lessees and the
Lessor (a copy of which opinion letter the Guarantor and each Lessee hereby
acknowledges it has received) and relating to it, and (ii) on a semi-annual
basis, provide to the Rating Agencies, the Trustee and the Master Collateral
Agent an Officer's Certificate certifying that it is in compliance with its
obligations under this Section 24.10.
Section 24.11. Maintenance of Enhancement. Maintain the Series 1997
Letters of Credit or other Enhancement for the Series 1997 Variable Funding
Notes and, if any, other Shared Collateral Series Notes in a stated amount equal
to or greater than the amount required by Moody's and S&P in order to maintain a
rating of not less than A-1 by S&P and (after the earlier of the issuance of a
rating of the Commercial Paper Notes by Moody's and the 31st day after the VFN
Closing Date) P-1 by Moody's on the Commercial Paper Notes.
Section 24.12. Repurchase Payments; Sales Proceeds. (i) Direct each
Manufacturer to make all payments under the Manufacturer Programs with respect
to Program Vehicles leased under this Lease directly to the Master Collateral
Account; (ii) cause all payments by any other Persons (including payments
contemplated by Section 12.2) with respect to any Master Collateral (other than
the Master Collateral described in the proviso to this Section) to be made
directly to the Master Collateral Account; (iii) in the case of any such
payments with respect to any Master Collateral received directly by the Lessee,
except as described in the proviso to this Section, by the second Business Day
following its receipt thereof, deposit such payments into the Master Collateral
Account; and (iv) within two Business Days of the Lessee's receipt thereof,
deposit all amounts representing the proceeds from sales by auction dealers
under a Guaranteed Depreciation Program and sales (including amounts paid to the
Lessee by a Manufacturer as a result of the Lessee's sale of such Vehicle
outside such Manufacturer's Manufacturer Program) of Vehicles by the Lessee to
third parties (other than under any related Manufacturer Program) into the
Master Collateral Account; provided, however, that insurance proceeds with
respect to Vehicles will only be deposited into the Master Collateral Account if
an Amortization Event or Potential Amortization Event shall have occurred and be
continuing.
Section 24.13. Certificates of Title: Verification of Titles. (i) Take,
or cause to be taken, such action as shall be necessary to submit all of the
Certificates of Title (except the Certificates of Title for the Initial Fleet)
to the appropriate state authority for notation of the Master Collateral Agent's
lien thereon (it being understood and agreed that pursuant to the Master
Collateral Agency Agreement, the original Certificates of Title relating to the
Series 1997 Vehicles and reflecting such lien notation by the appropriate state
authority shall be held by the applicable Servicer thereof, in trust for the
benefit of the Master Collateral Agent and the Trustee as
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assignee of the Lessor, and the Certificates of Title shall be subject to all of
the provisions of the Master Collateral Agency Agreement); (ii) no more than
semiannually, upon the request of any one (but not more than one) of the Lessor,
the Trustee or the Master Collateral Agent, cause a title check of a
representative or random sample of titles (such random sample to be compiled
taking into account the multiple locations at which the Certificates of Title
with respect to the Series 1997 Vehicles are held by the Servicer) by a Person
acceptable to the Lessor, the Trustee and the Master Collateral Agent on a
reasonable number (but in no event less than 2%) of the Series 1997 Vehicles,
including verification that the titles reflect the pledge to the Master
Collateral Agent, and prepare a report of exceptions with the results of such
title check and cause such report to be furnished to the Lessor, the Trustee,
the Master Collateral Agent and the Rating Agencies (provided, however, if (x)
any such title check reveals that 10% of such sample does not comply with the
requirement that (1) the Master Collateral Agent be noted as the first
lienholder on such titles or (2) the Lessor (or, in the case of Financed
Vehicles and the Synthetic Lease Vehicles, the applicable Lessee) be listed as
the registered owner on such titles or (y) a Potential Lease Event of Default or
Lease Event of Default has occurred and is continuing, then upon the request of
the Master Collateral Agent, the Lessor or the Trustee, the Master Servicer will
cause additional title checks to be performed (at the Lessee's expense) on a
reasonable number of the Series 1997 Vehicles); and (iii) at any time, upon the
request of the Lessor, the Trustee or the Master Collateral Agent, cause (at the
requesting party's expense) a title check in accordance with the above stated
procedures to be performed on the Series 1997 Vehicles.
Section 24.14. Master Collateral Agency Agreement. Concurrently with
each leasing of a Vehicle under this Lease, indicate on its computer records
that the Master Collateral Agent as assignee of the Lessor or the Lessee, as the
case may be, is the holder of a Lien on such Vehicle for the benefit of the
Trustee and the Other VFN Beneficiaries pursuant to the terms of the Master
Collateral Agency Agreement. The Lessee shall not utilize selection procedures
which it believes are adverse to the Lessor or the Trustee in selecting the
Series 1997 Vehicles to be designated to NFLP, as a Financing Source and the
Trustee (for the benefit of the Series 1997 Variable Funding Noteholders), as a
Beneficiary under the Master Collateral Agreement or to the Other VFN
Beneficiaries.
Section 24.15. Compliance with Laws. (i) Not violate any law,
ordinance, rule, regulation or order of any Governmental Authority applicable to
it or its property, which violation is reasonably likely to have a Material
Adverse Effect, (ii) file in a timely manner all reports, documents and other
materials required to be filed by it with any governmental bureau, agency or
instrumentality, except where failure to make such filings is not reasonably
likely to have a Material Adverse Effect and (iii) retain all records and
documents required to be retained by it pursuant to any Requirement of Law,
except where failure to retain such records is not reasonably likely to have a
Material Adverse Effect.
Section 24.16. Delivery of Information. Provide the Lessor with any
information or materials reasonably necessary for the Lessor to comply with its
obligations under the Indenture or any of the Liquidity Agreements.
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Section 24.17. Restrictions. Insure that the Series 1997 Non-Program
Percentage shall not exceed the Maximum Non-Program Percentage.
Section 24.18. Deliveries: Further Assurances. At its sole expense, (i)
immediately deliver or cause to be delivered to the Lessor (or the Master
Collateral Agent on the Lessor's behalf), in due form for transfer (i.e.,
endorsed in blank), all securities, chattel paper, instruments and documents, if
any, at any time representing all or any of the Master Collateral with respect
to which the Trustee (for the benefit of the Series 1997 Variable Funding
Noteholders) or any Other VFN Beneficiary, is designated as the Beneficiary (it
being understood that the Certificates of Title shall be held by the Servicer of
such Vehicles or the Master Collateral Agent, as the case may be, pursuant to
the provisions of the Master Collateral Agency Agreement), and (ii) execute and
deliver, or cause to be executed and delivered, to the Lessor or the Master
Collateral Agent, as the case may be, in due form for filing or recording (and
pay the cost of filing or recording the same in all public offices reasonably
deemed necessary or advisable by the Lessor, the Master Collateral Agent or the
Trustee, as the case may be), such assignments, security agreements, mortgages,
consents, waivers, financing statements, and other documents, and do such other
acts and things, all as may from time to time be reasonably necessary or
desirable to establish and maintain to the satisfaction of the Lessor, the
Master Collateral Agent, the Trustee and each Other VFN Beneficiary a valid
perfected first-priority Lien on and security interest in all of the Master
Collateral with respect to which the Trustee (for the benefit of the Series 1997
Variable Funding Noteholders) or any Other VFN Beneficiary is designated as the
Beneficiary now or hereafter existing or acquired.
Section 24.19. Additional Actions. The Master Servicer shall:
(a) instruct the Trustee or the Paying Agent, as applicable,
to make withdrawals and payments from the VFN Collection Accounts, as
contemplated in the Indenture;
(b) at the request of the Trustee as required or permitted
upon or after the occurrence of events specified in the Indenture and,
to the extent permitted under and in compliance with applicable laws
and regulations, execute and deliver, for the benefit of the Series
1997 Variable Funding Noteholders under the Indenture, any and all
instruments necessary or appropriate to commence or maintain
enforcement proceedings with respect to Manufacturer Programs or any
Enhancement;
(c) upon the occurrence of a Lease Payment Deficit, deliver to
the Trustee a notice in the form attached hereto as Exhibit B; and
(d) supervise the servicing of the Series 1997 Vehicles and
perform such other functions and take such other actions as it is
designated to perform or take pursuant to the terms and conditions of
any Related Document.
Section 24.20. Fleet Sharing Agreements. Each Lessee agrees that each
Fleet Sharing Agreement will include provisions consistent with those contained
in Section 31 of this Lease
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pursuant to which, inter alia, each Fleet Sharing Party expressly and
irrevocably submits to the non-exclusive jurisdiction of all federal and state
courts of the State of New York and shall also include a provision whereby each
Fleet Sharing Party agrees to be bound by the provisions of Section 9.2(b) of
the Base Indenture.
Section 24.21. Minimum Depreciation Rate. Each Servicer and the Master
Servicer agree that the Depreciation Schedules with respect to Non-Program
Vehicles leased under this Lease shall be established such that the weighted
average Depreciation Charges accruing with respect to each Non-Program Vehicle
during each Related Month shall be at least equal to 1.25%.
SECTION 25. CERTAIN NEGATIVE COVENANTS. Until the expiration or
termination of this Lease and thereafter until the Liabilities are paid in full,
each Lessee agrees that, unless at any time the Lessor, the Master Collateral
Agent (other than in respect of Sections 25.1 and 25.2) and the Trustee shall
otherwise expressly consent in writing, it will not:
Section 25.1. Mergers, Consolidations. Be a party to any merger or
consolidation, other than a merger or consolidation of any Affiliate of a Lessee
into or with such Lessee (provided that the Lessee is the surviving corporation
or, if such Affiliate is also a Lessee, a Lessee is the surviving corporation).
Section 25.2. Regulations G, T, U and X. Use or permit any amounts
funded by the Lessor pursuant to the Financing Lease or the Synthetic Lease to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying margin stock" within the
meaning of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, as amended from time to time.
Section 25.3. Liens. Create or permit to exist any Lien with respect to
any Master Collateral with respect to which the Trustee (for the benefit of the
Series 1997 Variable Funding Noteholders) or any Other VFN Beneficiary is
designated as the Beneficiary, whether now or hereafter existing or acquired,
except Permitted Liens.
Section 25.4. Use of Vehicles. Use or contractually permit any Series
1997 Vehicles to be used in any manner (i) that would make such Series 1997
Vehicles which are Program Vehicles ineligible for repurchase or auction under
the related Eligible Manufacturer Program (unless such Vehicles are redesignated
as Non-Program Vehicles pursuant to Section 14), (ii) for any illegal purposes
or (iii) that could subject any Vehicles to confiscation.
Section 25.5. Change of Location or Name. Change (a) the location of
its principal place of business, chief executive office or its consolidated
records concerning its business and financial affairs, or (b) its legal name or
the name under or by which it conducts its business, in each case without first
giving the Master Collateral Agent, the Trustee, each Support Credit Enhancer,
the Rating Agencies and the Lessor at least sixty (60) days' advance written
notice thereof and having taken any and all action required to maintain and
preserve the first priority
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perfected Lien of the Master Collateral Agent in the Master Collateral;
provided, however, that notwithstanding the foregoing, the Lessee shall not
change the location of its principal place of business, chief executive office
or its consolidated records concerning its business and financial affairs to any
place outside the United States of America.
SECTION 26. SERVICING COMPENSATION; DELEGATION OF SERVICING
DUTIES.
Section 26.1. As compensation for its servicing activities hereunder
and reimbursement for its expenses as set forth in Section 26.2, each Servicer
shall be entitled to receive from the Lessor a monthly servicing fee (the
"Monthly Servicing Fee"), payable in arrears on each Payment Date prior to the
termination of this Lease, the Indenture and the Master Collateral Agency
Agreement in an amount equal to the sum of the monthly servicing fees for all
Series of Shared Collateral Series Notes. Except as otherwise specified in the
related Supplement, the Monthly Servicing Fee for each Series of Shared
Collateral Series Notes (each, a "Series Monthly Servicing Fee") on each Payment
Date shall be equal to (i) the portion of the Supplemental Servicing Fee
allocated to such Series of Shared Collateral Series Notes pursuant to the
related Supplement, plus (ii) one-twelfth of the product of (A) the Servicing
Fee Percentage for such Series and (B) the Invested Amount of such Series as of
the preceding Payment Date (after giving effect to any payments of principal on
such date). The Series Monthly Servicing Fee for each Series shall be paid to
the Servicer pursuant to the procedures set forth in the applicable Supplement.
The supplemental servicing fee (the "Supplemental Servicing Fee") for any period
shall be equal to all Carrying Charges comprising payments due from the
Servicers under Section 26.2 hereof.
Section 26.2. The Servicers' expenses include, and each Servicer agrees
to pay (pro rata, on the basis of the Net Book Value of Series 1997 Vehicles
serviced by such Servicer), the amounts due to the Trustee pursuant to Section
10.5 of the Indenture, plus the reasonable fees and disbursements of independent
accountants in connection with reports furnished pursuant to Sections 24.7(i)
and (ii), plus all other fees, expenses and indemnities by the Servicer or the
Lessor in connection with the Servicer's activities hereunder or under the
Related Documents. The Servicer, however, shall not be liable for any
liabilities, costs or expenses of the Lessor, the Trustee or the Noteholders
arising under any tax law, including without limitation any Federal, state or
local income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith), except to the extent incurred as a result of the
Servicer's violation of the provisions of this Lease or of the Related
Documents; provided, however, the foregoing provisions of this sentence shall
not affect the indemnification obligations of the Lessees under Section 15 of
this Lease. In the event that a Servicer fails to pay any amount due to the
Trustee pursuant to Section 10.5 of the Base Indenture, the Trustee will be
entitled to receive such amounts due from the Monthly Servicing Fee prior to
payment thereof to the Servicers.
Section 26.3. Any Servicer (the "Named Servicer") may delegate to
another Servicer the performance of the Named Servicer's obligations as a
Servicer in respect of Series 1997 Vehicles
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leased by the Named Servicer in its capacity as a Lessee (but the Named Servicer
shall remain fully liable for its obligations in respect of such Vehicles under
this Series 1997 Lease and the other Related Documents).
SECTION 27. RELEASE OF COLLATERAL. The parties agree that pursuant to
the provisions of this Section 27 and Sections 2.3 and 2.7 of the Master
Collateral Agency Agreement, any and all Liens for the benefit of the Lessor
(including the Lien of the Trustee as assignee of the Lessor, and as Beneficiary
under the Master Collateral Agency Agreement) on the Series 1997 Vehicles and
the Certificates of Title therefor shall be released or deemed to be released,
as provided below. From and after the earliest of:
(a) in the case of a Vehicle subject to a Guaranteed
Depreciation Program, the date of the sale of such Vehicle by an
auction dealer to a third party, and in the case of any other Program
Vehicle, the Disposition Date for such Vehicle; or
(b) receipt of the purchase price by the Lessor or the Trustee
for a Vehicle sold in an ordinary course sale; or
(c) the payment in full of all obligations of the applicable
Servicer and the applicable Lessee under this Lease with respect to a
Vehicle,
any and all Liens for the benefit of the Lessor (including the Lien of the
Trustee as assignee of the Lessor and as Beneficiary under the Master Collateral
Agency Agreement) on such Vehicle and the Certificate of Title therefor shall be
deemed to be released. Subject to the applicable Servicer's right to redesignate
Program Vehicles as Non-Program Vehicles in accordance with Section 14, the
Lessor or the applicable Servicer, acting as the agent of the Lessor, may direct
the Lessee to sell any Program Vehicle that is a Financed Vehicle or a Synthetic
Lease Vehicle during the Repurchase Period therefor in an ordinary course sale,
provided that, if such sale is not made pursuant to the related Manufacturer
Program, it is made in accordance with the requirements of this Section 27. Each
Lessee agrees that for purposes of this Section 27 if an ordinary course sale
occurs during the Repurchase Period with respect to a Program Vehicle that is a
Financed Vehicle or a Synthetic Lease Vehicle, the Lessee shall only sell such
Vehicle for a purchase price (including any amounts paid by the Manufacturer as
an incentive for selling such Vehicle outside of the related Manufacturer
Program), net of all fees and expenses incurred in connection with such sale,
equal to or greater than the Repurchase Price that it would have received under
the related Manufacturer Program if it had turned back such Vehicle to the
Manufacturer, net of all fees and expenses that would have been incurred in
connection with such turn-back less reasonably predictable Excess Mileage
Charges, Excess Damage Charges, Missing Equipment Charges and other similar
charges payable by the Lessee to such Manufacturer as a result of the Lessee's
sale of such Program Vehicle. In addition, each Lessee agrees that ordinary
course sales of Program Vehicles occurring during the Repurchase Period related
to such Program Vehicles will be limited to a maximum number of Vehicles so sold
of ten percent (10%) per month of the number of Vehicles leased under this
Agreement. The Lessor shall, and shall cause the Trustee and the Master
Collateral Agent to, execute such documents and
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instruments as a Lessee may reasonably request (including a power of
attorney of the Master Collateral Agent appointing such Lessee to act as the
agent of the Master Collateral Agent in taking such actions as are required to
evidence the release of the Lien of the Master Collateral Agent on Vehicles
leased by such Lessee turned back or sold pursuant to the provisions of this
Section 27, which power of attorney shall be revocable pursuant to Section
2.7(c) of the Master Collateral Agency Agreement).
SECTION 28. GUARANTY.
Section 28.1. Guaranty. In order to induce the Lessor to execute and
deliver this Lease and to lease Series 1997 Vehicles to the Lessees, and in
consideration thereof, the Guarantor hereby (i) unconditionally and irrevocably
guarantees to the Lessor the obligations of the Lessees to make any payments
required to be made by them under this Lease, (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 (whether in their
respective capacities as Lessees or as Servicers) under this Lease, and (iii)
agrees that, if for any reason whatsoever, any Lessee (whether in its capacity
as a Lessee or as a Servicer) 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 28 (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, Servicers or any other person before or as a condition to
the obligations of the Guarantor pursuant to this Guaranty.
Section 28.2. Scope of Guarantor's Liability. The Guarantor's
obligations hereunder are independent of the obligations of the Lessees (whether
as Lessee or as Servicer), 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 Lease 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.
Section 28.3. Lessor's Right to Amend this Lease. 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,
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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.
Section 28.4. 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; or
(ii) any act or omission of the Lessor or any other Person
that directly or indirectly results in the discharge
or release of any of the Lessees or any other Person
or any of the Guaranteed Obligations or any security
therefor; provided that the Guarantor's liability in
respect of this Guaranty shall be released to the
extent the Lessor expressly releases such Lessee or
other Person, in a writing conforming to the
requirements of Section 22, 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;
(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) presentment, demand, protest and notice of any kind, including
without limitation notices of default and notice of acceptance of this Guaranty;
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(d) all suretyship defenses and rights of every nature otherwise
available under New York law and the laws of any other jurisdiction;
(e) any right that the Guarantor has or may have to set-off with
respect to any right to payment from any Lessee; and
(f) all other rights and defenses the assertion or exercise of which
would in any way diminish the liability of the Guarantor hereunder.
Section 28.5. 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
unsecured debts, obligations and liabilities of the Lessees to the Guarantor or
the Guarantor to any of the Lessees (hereinafter collectively referred to as
"Subordinated Debt") shall be and hereby are expressly subordinated to the prior
payment in full of the Guaranteed Obligations, on the terms set forth in clauses
(a) through (e) below, and the payment thereof is expressly deferred in right of
payment to the prior payment in full of the Guaranteed Obligations. For purposes
of this Section 28.5, 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 the Guarantor or
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) the holders of the Guaranteed Obligations shall be
entitled to receive payment in full of the Guaranteed
Obligations before the Guarantor or the Lessee, as
the case may be, is entitled to receive any payment
on account of the Subordinated Debt;
(ii) any payment by, or distribution of assets of, the
Guarantor or such Lessee of any kind or character,
whether in cash, property or securities, to which
such Lessee or the Guarantor would be entitled except
for this subordination shall be paid or delivered by
the Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or
liquidating trustee, or otherwise, directly to the
Trustee, for the benefit of the holders of the
Guaranteed Obligations to be held as additional
security for the Guaranteed Obligations in an
interest bearing account until the Guaranteed
Obligations have been paid in full; and
(iii) if, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Guarantor or such
Lessee of any kind or character, whether in cash,
property or securities, in respect of any
Subordinated Debt shall be
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received by such Lessee or the Guarantor before the
Guaranteed Obligations are paid in full, such payment
or distribution shall be held in trust in an interest
bearing account of the Guarantor or such Lessee, as
appropriate, and immediately paid over in kind to the
holders of the Guaranteed Obligations until the
Guaranteed Obligations have been paid in full.
(b) The Guarantor authorizes and directs each Lessee and each Lessee
authorizes and directs the Guarantor to take such action as may be necessary or
appropriate to effectuate and maintain the subordination provided herein.
(c) No right of any holder of the Guaranteed Obligations to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Guarantor, any Lessee, the
Lessor or any other Person or by any noncompliance by the Guarantor, any Lessee,
the Lessor or any other Person with the terms, provisions and covenants hereof
or of the Related Documents regardless of any knowledge thereof that any such
holder of the Guaranteed Obligations may have or be otherwise charged with.
(d) Except as provided in Section 28.9, 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.
Section 28.6. Guarantor to Pay Lessor's Expenses. The Guarantor agrees
to pay to the Lessor (or the Trustee), on demand, all costs and expenses,
including attorneys' and other professional and paraprofessional fees, incurred
by the Lessor (or the Trustee) 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, for
each Interest Period during the period from the date of such demand until paid,
at the VFR for such Interest Period plus 1% (calculated on the basis of a
360-day year).
Section 28.7. 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 Lease is rescinded or must
otherwise be restored or returned by the Lessor, upon an event of bankruptcy,
dissolution, liquidation or reorganization of any Lessee or the Guarantor or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Lessee, the Guarantor, any other
guarantor or any other Person,
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or any substantial part of their respective property, or otherwise, all as
though such payment had not been made.
Section 28.8. 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.
Section 28.9. Third-Party Beneficiaries. The Guarantor acknowledges
that the Trustee (on behalf of the Series 1997 Variable Funding Noteholders) has
accepted the assignment of the Lessor's rights under this Lease as collateral
for the Series 1997 Variable Funding Notes in reliance on the Guaranty and that
the Trustee (for the benefit of the Series 1997 Variable Funding Noteholders)
shall be a third-party beneficiary hereunder.
SECTION 29. ADDITIONAL LESSEES.
Section 29.1. Additional Affiliate and Subsidiary Lessees. Any direct
or indirect subsidiary of the Guarantor (each, a "Guarantor Subsidiary") shall
have the right to become a "Lessee" under and pursuant to the terms of this
Agreement by complying with the provisions of this Section 29.1. In the event a
Guarantor Subsidiary desires to become a "Lessee" under this Agreement, then the
Guarantor and such Guarantor Subsidiary shall execute (if appropriate) and
deliver to the Lessor and the Trustee:
(a) a Joinder in Lease Agreement in the form attached hereto
as Attachment D (each, an "Affiliate Joinder in Lease");
(b) the certificate of incorporation for such Guarantor
Subsidiary, duly certified by the Secretary of State of the
jurisdiction of such Guarantor Subsidiary's incorporation, together
with a copy of the by-laws of such Guarantor Subsidiary, duly certified
by a Secretary or Assistant Secretary of such Guarantor Subsidiary;
(c) copies of resolutions of the Board of Directors of such
Guarantor Subsidiary authorizing or ratifying the execution, delivery
and performance, respectively, of those documents and matters required
of it with respect to this Agreement, duly certified by the Secretary
or Assistant Secretary of such Guarantor Subsidiary;
(d) a certificate of the Secretary or Assistant Secretary of
such Guarantor Subsidiary certifying the names of the individual or
individuals authorized to sign the Affiliate Joinder in Lease Agreement
and the other Related Documents to be executed by it, together with
samples of the true signatures of each such individual;
(e) a good standing certificate for such Guarantor Subsidiary
in the jurisdiction of its incorporation and the jurisdiction of its
principal place of business;
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(f) a written search report from a Person satisfactory to the
Lessor and the Trustee listing all effective financing statements that
name such Guarantor Subsidiary as debtor or assignor, and that are
filed in the jurisdictions in which filings were made pursuant to
clause (g) below, together with copies of such financing statements,
and tax and judgment lien search reports from a Person satisfactory to
the Lessor and the Trustee showing no evidence of liens filed against
such Guarantor Subsidiary that purport to affect any Vehicles leased
hereunder or any Collateral under the Indenture;
(g) evidence of the filing of proper financing statements on
Form UCC-1 naming such Guarantor Subsidiary, as debtor, and the Lessor
as secured party covering the collateral described in Section 2(b)
hereof;
(h) an Officers' Certificate and an opinion of counsel each
stating that such joinder by such Guarantor Subsidiary complies with
this Section 29.1 and that all conditions precedent herein provided for
relating to such transaction have been complied with;
(i) a statement from each of the Rating Agencies that such
Guarantor Subsidiary becoming a "Lessee" under this Agreement will not
cause a failure to meet the Rating Agency Condition; and
(j) any additional documentation that the Lessor or the
Trustee may reasonably require to evidence the assumption by such
Guarantor Subsidiary of the obligations and liabilities set forth in
this Agreement.
Upon satisfaction of the foregoing conditions and receipt by such Guarantor
Subsidiary of the applicable Affiliate 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.
SECTION 30. 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 1997 Variable Funding Notes, all
Series of Shared Collateral Series Notes and all other obligations of the Lessor
under the Related Documents, 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
30, the Lessor agrees, for the benefit of the Series 1997 Variable Funding
Noteholders and all Shared Collateral Series Noteholders, that it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such a petition by the Guarantor or such Lessee against the Lessor or the
commencement of such action and raise the defense that the Guarantor or such
Lessee has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other
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defenses, if any, as its counsel advises that it may assert. The
provisions of this Section 30 shall survive the termination of this Lease.
SECTION 31. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS LEASE, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE TRUSTEE, THE LESSOR, THE GUARANTOR OR THE LESSEES SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY VEHICLE, OTHER
MASTER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE LESSOR'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SUCH VEHICLE, OTHER MASTER COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE GUARANTOR AND EACH LESSEE HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE
COURTS OF THE STATE OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE GUARANTOR AND EACH LESSEE FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE
GUARANTOR AND EACH LESSEE AND THE LESSOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR OR ANY LESSEE
HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS LEASE.
SECTION 32. GOVERNING LAW. THIS LEASE 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 Lease
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Lease 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 Lease.
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All obligations of the Guarantor and the Lessees and all rights of the Lessor,
the Master Collateral Agent 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.
SECTION 33. 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 LEASE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS LEASE
OR ANY RELATED TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 34. NOTICES. All notices, amendments, waivers, consents and
other communications provided to any party hereto under this Lease shall be in
writing and addressed, delivered or transmitted to such party at its address or
facsimile number set forth below its signature hereto or at such other address
or facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed by certified or registered mail and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted upon receipt of electronic
confirmation of such. In each case, a copy of all notices, requests and other
communications (other than any such notices, requests and other communications
in the ordinary course of business) that are sent by any party or signatory
hereunder shall be sent to the Trustee at the following address:
THE BANK OF NEW YORK
000 Xxxxxxx Xxxxxx
Floor 12 East
New York, New York 10286
Attention: Corporate Trust Division
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECTION 35. HEADINGS. Section headings used in this Lease are for
convenience of reference only and shall not affect the construction of this
Lease.
SECTION 36. EXECUTION IN COUNTERPARTS. This Lease may be executed in
any number of counterparts and by different parties hereto in 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.
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69
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties have executed this Lease or caused it to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
LESSEES AND SERVICERS:
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/ Xxxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Assistant Treasurer
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
ALAMO RENT-A-CAR, INC.
By: /s/ Xxxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Treasurer
Address: c/o Republic Industries, Inc.
000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
VALUE RENT-A-CAR, INC.
By: /s/ Xxxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Treasurer
Address: c/o Republic Industries, Inc.
000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
71
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
SPIRIT RENT-A-CAR, INC.
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Treasurer
Address: 00000 Xxxxxx Xxxx
Xxxxx 000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (440) 715-1000 ext. 320
LESSOR:
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL FINANCING
CORPORATION, its general partner
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title:Vice President and Assistant Secretary
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
72
GUARANTOR:
------------
REPUBLIC INDUSTRIES, INC.
By: /s/ Xxxxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Vice President Finance and Treasurer
Address: 000 Xxxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Acknowledged by:
MASTER COLLATERAL AGENT:
-----------------------
CITIBANK, N.A.
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: Assistant Vice President
Address: 000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
73
ANNEX A
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer,
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer,
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
74
1. Scope of Annex. This Annex A shall apply only to the acquisition,
leasing and servicing of the Acquired Vehicles by NFLP pursuant to the Base
Lease, as supplemented by this Lease Annex (collectively, the "Operating
Lease").
2. General Agreement. The Lessor and the Lessee intend that for all
purposes (including, but not limited to, financial accounting, regulatory
accounting, federal income tax purposes and all applicable state and local
income, franchise, sales, use and excise tax purposes and for purposes of any
foreign corporation, business registration or doing business statutes), (A) the
Series 1997 Lease with regard to Acquired Vehicles will be treated as an
"operating lease" pursuant to Statement of Financial Accounting Standards No.
13, as amended, as well as for all tax purposes, (B) the Lessor will be treated
as the owner and lessor of the Acquired Vehicles, (C) the Lessee thereof will
be treated as the lessee of the Acquired Vehicles, and (D) the Lessor will be
entitled to all tax benefits ordinarily available to an owner of property
similar to the Acquired Vehicles for such tax purposes.
3. Operating Lease Commitment. (a) Upon the execution and delivery of
this Operating Lease, the Lessor shall, subject to the terms and conditions of
the Agreement, purchase from time to time on or after the Lease Commencement
Date and prior to the Lease Expiration Date, all Acquired Vehicles identified
in Vehicle Orders placed under this Lease 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 applicable
Lessee with respect to such Vehicles; provided, that the aggregate Net Book
Value of Acquired Vehicles leased under this Operating Lease, plus past due
Monthly Base Rent under this Operating Lease on any date shall not exceed the
Maximum Lease Commitment, reduced by (a) the Base Amount as of such date with
respect to the Financing Lease and (b) the Base Amount as of such date with
respect to the Synthetic Lease.
4. Reserved.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
Operating Lease as it relates to each Acquired 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, however, the
maximum Vehicle lease term of the Operating Lease as it relates to any Acquired
Vehicle titled in the state of Illinois shall be from the Vehicle Lease
Commencement Date to the date that is three hundred and sixty-four (364) days
from the Vehicle Lease Commencement Date; provided, further, that if on such
three hundred sixty-fourth (364th) day, the Vehicle lease term for any Acquired
Vehicle titled in the State of Illinois has not theretofore been terminated,
and the Vehicle lease term for such Acquired Vehicle has not previously been
terminated and renewed pursuant to this Paragraph 5, the Vehicle lease term as
it relates to such Acquired Vehicle shall be deemed to have been terminated and
renewed for an additional Vehicle lease term of up to three hundred sixty-four
(364) days). On the occurrence of such date for a Vehicle not previously
disposed of, the Lessee of such Vehicle shall, (a) on behalf of the Lessor,
promptly purchase or dispose of such Vehicle in accordance with the terms of
this Lease and in accordance with any instructions of the Lessor for such
disposition, which instructions shall not be inconsistent with the terms of
this Lease, (b) in each case, provide that Disposition Proceeds be paid
directly to
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the Master Collateral Account for the benefit of the Trustee and (c) pay to the
Master Collateral Agent or the Trustee, in accordance with this Operating
Lease, any other amounts unpaid and owing from the Lessee under the Series 1997
Lease in respect of such Vehicle.
6. Lessee's Rights to Purchase Vehicles. Each Lessee will have the
option, exercisable with respect to any Acquired Vehicle leased by it hereunder
during the Vehicle Term with respect to such Acquired Vehicle, to purchase any
such Acquired Vehicles leased under this Lease at the Vehicle Purchase Price,
in which event the Lessee will pay the Vehicle Purchase Price to the Master
Collateral Agent on or before the Payment Date next succeeding such purchase by
the Lessee plus all accrued and unpaid Monthly Base Rent, Monthly Variable Rent
and other unpaid charges, payments and amounts due and payable on such Payment
Date 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 an Acquired Vehicle which was leased by such
Lessee under this Lease, 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 Master
Collateral Agent on or before the Payment Date next succeeding such purchase by
the Lessee. Upon receipt of such funds by the Master Collateral Agent, the
Lessor, at the request of the Lessee, shall cause title to any such Vehicle or
Manufacturer Receivable, as applicable, to be transferred to the Lessee, the
lien of the Master Collateral Agent in such Vehicle or Manufacturer Receivable,
as applicable, will automatically be released and, with respect to a purchase
of a Vehicle, the Servicer thereof shall cause the Master Collateral Agent to
cause the notation of its lien to be removed from the certificate of title for
such Vehicle, concurrently with or promptly after the Vehicle Purchase Price
for such Vehicle (and any unpaid Monthly Base Rent, unpaid Monthly Variable
Rent and other unpaid charges, payments and amounts) is paid by the Lessee to
the Master Collateral Agent or the Trustee.
7. Vehicle Disposition. Subject to the applicable Servicer's right to
redesignate Program Vehicles as Non-Program Vehicles under Section 14 of the
Base Lease, the Lessor and the Lessees agree that, with respect to Acquired
Vehicles leased hereunder that are Program Vehicles, the applicable Lessee
shall, pursuant to Section 24.6 of the Base Lease (unless not required by such
Section) deliver each Vehicle for sale at auction or return each Vehicle to the
related Manufacturer, in each case in accordance with the applicable
Manufacturer Program during the Repurchase Period for such Vehicle; provided,
however, if for any reason, the Lessee fails to deliver such a Vehicle to the
applicable Manufacturer for repurchase by the Manufacturer or to an auction for
sale, in each case in accordance with the applicable Manufacturer Program,
during the Repurchase Period, and such Lessee does not or is not entitled to
redesignate such Program Vehicle as a Non-Program Vehicle in accordance with
Section 14 of the Base Lease, then such Lessee shall be obligated to pay a
Casualty Payment in respect of such Vehicle, as provided in Section 7 of the
Base Lease. Each Lessee shall, with respect to Acquired Vehicles which are
Program Vehicles leased by it hereunder, pay the Monthly Variable Rent accrued
with respect to such Vehicle through the date of return, plus the equivalent of
the Monthly Base Rent for the minimum holding period under the applicable
Manufacturer Program for Program Vehicles returned before the expiration of
such minimum holding period, regardless of actual usage, unless such minimum
holding period is waived by the
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76
Manufacturer or such a Vehicle is a Casualty or has ceased to be an Eligible
Vehicle, in which case Section 7 of the Base Lease shall apply with respect to
such Vehicle. All Repurchase Prices and Disposition Proceeds due from the
disposition of Vehicles pursuant to this Section shall be due and payable to
the Lessor and shall be deposited to the Master Collateral Account. The Lessor
and the Lessee agree, with respect to Acquired Vehicles that are Non-Program
Vehicles, that the Lessee thereof shall use commercially reasonable efforts to
dispose of each Non-Program Vehicle leased by it hereunder (a) in a manner
reasonably likely to maximize proceeds from such disposition and consistent
with industry practice and (b) within forty-two (42) months after the date of
the original dealer invoice for such Vehicle sold as a new vehicle. All
Disposition Proceeds due from the disposition of Non-Program Vehicles pursuant
to this Section shall be due and payable to the Lessor and shall be deposited
into the Master Collateral Account.
8. Lessor's Right to Cause Vehicles to be Sold. Notwithstanding
anything to the contrary contained in this Lease (subject to the applicable
Servicer's right to redesignate Program Vehicles as Non-Program Vehicles under
Section 14 of the Base Lease), the Lessor shall have the right, at any time
after the date fourteen (14) days prior to the expiration of the Repurchase
Period for any Program Vehicle leased under this Operating Lease, to require
that the Lessee thereof deliver such Program Vehicle to the Manufacturer for
repurchase or, as applicable, to the designated auction for sale, or exercise
commercially reasonable efforts to arrange for the sale of such Program Vehicle
to a third party for a price greater than the Net Book Value thereof, in which
event the Lessee shall, prior to the expiration of such Repurchase Period,
deliver such Vehicle to its Manufacturer or the designated auction or arrange
for the sale of such Vehicle to a third party for a price greater than the Net
Book Value (or purchase the Vehicle itself from the Lessor for the Vehicle
Purchase Price). If a sale of the Program Vehicle is arranged by the Lessee
prior to the expiration of such Repurchase Period, then the Lessee shall
deliver the Program Vehicle to the purchaser thereof, the Lien of the Master
Collateral Agent on the Certificate of Title of such Program Vehicle shall be
released, and the Lessee shall cause to be delivered to the Lessor the funds
paid for such Program Vehicle by the purchaser. If the Lessee is unable to
arrange for a sale of the Program Vehicle prior to the expiration of such
Repurchase Period, then the Lessee shall cease attempting to arrange for such a
sale and shall return such Program Vehicle to the applicable Manufacturer or
tender such Program Vehicle for auction or purchase such Vehicle as herein
provided. In no event may any Program Vehicle be sold pursuant to this Section
8 (other than pursuant to a Manufacturer Program) unless such sale
complies with Section 12.2 of the Base Lease.
9. Calculation of Rent. Rent shall be due and payable on a monthly basis
as set forth in this paragraph 9:
"Additional Base Rent" with respect to the Non-Program Vehicles
leased hereunder, with respect to each Payment Date shall equal the
amount, if any, by which (a) 100% of the aggregate Net Book Value of such
Non-Program Vehicles leased under this Lease on the last day of the
Related Month exceeds (b) the three (3) month rolling average of the Fair
Market Value of such Non-Program Vehicles for the preceding three (3)
calendar months.
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77
"Monthly Base Rent", with respect to each Payment Date and
each Acquired Vehicle leased under the Series 1997 Lease on any day
during the Related Month, shall be the sum of all Depreciation Charges
that have accrued with respect to such Vehicle during the Related
Month.
"Monthly Variable Rent", with respect to each Payment Date
and each Acquired Vehicle leased under the Series 1997 Lease on any
day during the Related Month, shall equal the sum of (I) the product
of (a) an amount equal to the sum, without double counting, of (i) the
Series 1997-1 Note Interest accruing during the Series 1997-1 Interest
Period occurring during such Related Month plus (ii) the Series 1997-2
Note Interest accruing during the Series 1997-2 Interest Period
occurring during such Related Month plus (iii) the Series 1997-3 Note
Interest accruing during the Series 1997-3 Note Period occurring
during such Related Month plus (iv) the Series 1997-4 Note Interest
accruing during the Series 1997-4 Interest Period occurring during
such Related Month plus (v) the note interest accruing during the
Related Month with respect to any other Shared Collateral Series plus
(vi) all Carrying Charges for the Related Month, and (b) the quotient
obtained by dividing the Net Book Value of such Acquired Vehicle as of
the last day of the Related Month by the Net Book Value of all
Vehicles leased under the Series 1997 Lease as of the last day of the
Related Month plus (II) 0.50% of the amount determined pursuant to
clause (I).
"Rent" means Monthly Base Rent plus Monthly Variable Rent
plus Additional Base Rent.
10. Payment of Rent and Other Payments.
(a) Monthly Base Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below,
each Lessee shall pay to the Lessor the Monthly Base Rents that have
accrued during the Related Month with respect to all Vehicles that
were leased by such Lessee under the Operating Lease on any day during
the Related Month;
(c) Monthly Variable Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below,
each Lessee shall pay to the Lessor the Monthly Variable Rents that
have accrued during the Related Month with respect to all Vehicles
that were leased by such Lessee under the Operating Lease on any day
during the Related Month. On each other date on which Note Interest is
due and payable under the terms of a Series 1997 Variable Funding
Supplement, each Lessee shall pay to the Lessor, as Monthly Variable
Rent, an amount equal to the amount of Note Interest due and payable
on such date in respect of the Series 1997 Variable Funding Notes.
(c) Termination Payments and Casualty Payments. On each Payment
Date, after giving credit for all prepayments on account thereof
pursuant to (f) below, each Lessee shall pay to the Lessor all
Termination Payments and Casualty Payments payable by such Lessee as
provided in Section 5.3 of the Base Lease; and
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(d) Additional Base Rent. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee
shall pay to the Lessor an amount equal to the product of (A) the
monthly Additional Base Rent that has accrued during the Related Month
with respect to the Non-Program Vehicles leased under this Lease by
the Lessees and (B) a fraction, the numerator of which is the Net Book
Value of all Non-Program Vehicles leased by such Lessee under the
Operating Lease and the denominator of which is the Net Book Value of
all Non-Program Vehicles leased by the Lessees under this Lease; and
(e) Certain Other Payments. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee
shall direct all Repurchase Prices and Disposition Proceeds payable in
respect of Acquired Vehicles to be deposited directly to the Master
Collateral Account for the benefit of the Trustee. Each Servicer and
each Lessee each agrees that in the event that any such Servicer or
any such Lessee shall receive directly any such payment, including
cash, securities, obligations or other property, the Servicer or the
Lessee, as the case may be, shall accept the same as the agent of the
Master Collateral Agent and shall hold the same in trust on behalf of
and for the benefit of the Master Collateral Agent, and shall deposit
the same, by the date required for such deposit in Section 24.12 of
the Base Lease, into the Master Collateral Account in the same form
received, with the endorsement of the Servicer or the Lessee, as the
case may be, when necessary or appropriate.
(f) Prepayments. On any date, 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 Acquired Vehicles leased by such
Lessee.
11. Net Lease. THE OPERATING LEASE SHALL BE A NET LEASE, AND EACH
LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE
AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR
ANY REASON WHATSOEVER. The obligations and liabilities of each Lessee hereunder
shall in no way be released, discharged or otherwise affected (except as may be
expressly provided herein including, without limitation, the right of the
Lessee to reject Vehicles pursuant to Section 2.2 of the Base Lease) for any
reason, including without limitation: (i) any defect in the condition,
merchantability, quality or fitness for use of the Vehicles or any part
thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping or
destruction of or any requisition or taking of the Vehicles or any part
thereof; (iii) any restriction, prevention or curtailment of or interference
with any use of the Vehicles or any part thereof; (iv) any defect in, or any
Lien on, title to the Vehicles or any part thereof; (v) any change, waiver,
extension, indulgence or other action or omission in respect of any obligation
or liability of the Lessee or the Lessor; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the 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 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
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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 Lessee or otherwise; (x) any insurance
premiums payable by the Lessee with respect to the Vehicles; or (xi) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not the 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 the Lessee
hereunder. All payments by a Lessee made hereunder shall be final (except to
the extent of adjustments provided for herein), absent manifest error and,
except as otherwise provided herein, no Lessee shall seek to recover any such
payment or any part thereof for any reason whatsoever, absent manifest error.
If for any reason whatsoever the Operating Lease shall be terminated in whole
or in part by operation of law or otherwise except as expressly provided
herein, each Lessee shall nonetheless pay an amount equal to each Rent payment
at the time and in the manner that such payment would have become due and
payable under the terms of the Operating Lease as if it had not been terminated
in whole or in part. All covenants and agreements of any Lessee herein shall be
performed at its cost, expense and risk unless expressly otherwise stated.
12. Liens. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it free of all Liens arising during the Term. Upon the
Vehicle Lease Expiration Date for each Vehicle leased hereunder, the Lessor
may, in its discretion, remove any 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 applicable Lessee upon demand by the Lessor. The
Lessor may grant security interests in the Vehicles and the other Master
Collateral to the Master Collateral Agent, and in this Lease and the other
Series 1997 VFN Collateral to the Trustee, in accordance with the Master
Collateral Agency Agreement and the Indenture, and each Series 1997 Variable
Funding Noteholder may grant security interests in its Series 1997 Variable
Funding Notes, the Series 1997 Variable Funding Supplements and the other
Assigned Collateral to certain of its creditors, without consent of any Lessee.
Each Lessee acknowledges that the granting of Liens and the taking of other
actions pursuant to the Indenture and the Related Documents does not interfere
with the rights of the Lessee under the Operating Lease.
13. Non-Disturbance. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Vehicles will not be
disturbed during the Term subject, however, to Section 8 of this Annex A and
except that the Lessor, the Master Collateral Agent and the Trustee each
retains the right, but not the duty, to inspect the Vehicles without disturbing
the ordinary conduct of such Lessee's business in accordance with Section 24.2
of the Base Lease.
14. Certain Risks of Loss Borne by Lessees. Upon delivery of each
Vehicle to the applicable Lessee, as between the Lessor and the Lessee, the
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 Vehicle, however caused or occasioned,
including personal injury or
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death and property damage, arising with respect to any Vehicle due to the
manufacturer, purchase, acceptance, rejection, delivery, leasing, possession,
use, inspection, registration, operation, condition, maintenance, repair or
storage of such Vehicle, howsoever arising.
15. Title. This is an agreement to lease only, and title to the Acquired
Vehicles will at all times remain in the Lessor's name. No Lessee will have any
rights or interest in such Acquired Vehicles whatsoever other than the rights
of possession and use as provided by this Lease. In addition, each Lessee, by
its execution hereof, acknowledges and agrees that (i) the Lessor is the sole
owner and holder of all right, title and interest in and to the Manufacturer
Programs as they relate to the Acquired Vehicles leased hereunder and (ii) the
Lessee has no right, title or interest in any Manufacturer Program as it
relates to any Acquired Vehicle leased hereunder. To confirm the foregoing,
each Lessee, by its execution hereof, hereby assigns and transfers to the
Lessor any rights that the Lessee may have in respect to any Manufacturer
Programs as they relate to the Acquired Vehicles leased hereunder.
* * *
A-7
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ANNEX B
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer,
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer,
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
82
1. Scope of Annex. This Annex B shall apply only to the acquisition or
financing, leasing and servicing of the Financed Vehicles by the Lessees
pursuant to the Base Lease, as supplemented by this Lease Annex (collectively,
the "Financing Lease").
2. General Agreement. The Lessor and each Lessee intend that for all
purposes (including, but not limited to, financial accounting, regulatory
accounting, federal income tax purposes and all applicable state and local
income, franchise, sales, use and excise tax purposes and for purposes of any
foreign corporation, business registration or doing business statutes), with
respect to the Financed Vehicles, (A) this Lease, as supplemented by this Lease
Annex, will be treated as a financing arrangement, (B) the Lessor will be
treated as a lender making loans to the Lessees in amounts equal to the
Capitalized Costs or, in the case of Refinanced Vehicles, the Net Book Value of
Financed Vehicles, which loans are secured by the Financed Vehicles, (C) the
Lessees will be treated as making payments of principal and interest
(denominated as Monthly Base Rent and Monthly Supplemental Payments, and
Monthly Finance Rent, respectively) to the Lessor and (D) each Lessee will be
treated as the owner of the Financed Vehicles leased by it and will be entitled
to all tax benefits ordinarily available to an owner of property similar to the
Financed Vehicles for such tax purposes.
(b) It is the intention of the parties that this Agreement together with
the Master Collateral Agency Agreement shall constitute a security agreement
under applicable law.
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 the Lease Commencement Date refinance the Refinanced
Vehicles in an amount 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 finance the purchase of all other Financed Vehicles
identified in Vehicle Orders placed by each Lessee for a purchase price equal
to the Capitalized Cost thereof, and in each case simultaneously therewith
enter into the Financing Lease with the applicable Lessee with respect to the
Refinanced Vehicles and other Financed Vehicles, as the case may be; provided,
that the aggregate Net Book Value of Financed Vehicles leased under this
Financing Lease, plus past due Monthly Base Rent under this Financing Lease,
shall not on any date exceed the Maximum Lease Commitment reduced by (a) the
Base Amount as of such date with respect to the Operating Lease and (b) the
Base Amount as of such date with respect to the Synthetic Lease.
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, the Lessee shall pay to the Master Collateral Agent or the Trustee, in
accordance with this Financing Lease, any amounts unpaid and owing under the
Series 1997 Lease in respect of such Vehicle.
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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 Section 6:
"Additional Base Rent" with respect to the Non-Program Vehicles
leased hereunder, with respect to each Payment Date shall equal the
amount, if any, by which (a) 100% of the aggregate Net Book Value of such
Non-Program Vehicles leased under this Lease on the last day of the
Related Month exceeds (b) the three (3) month rolling average of the Fair
Market Value of such Non-Program Vehicles for the preceding three (3)
calendar months.
"Monthly Base Rent", with respect to each Payment Date and each
Financed Vehicle leased under the Series 1997 Lease on any day during the
Related Month, shall be the sum of all Depreciation Charges that have
accrued with respect to such Vehicle during the Related Month.
"Monthly Finance Rent", with respect to each Payment Date and
each Financed Vehicle leased under the Series 1997 Lease on any day during
the Related Month, shall equal the sum of (I) the product of (a) an amount
equal to the sum, without double counting, of (i) the Series 1997-1 Note
Interest accruing during the Series 1997-1 Interest Period occurring
during such Related Month plus (ii) the Series 1997-2 Note Interest
accruing during the Series 1997-2 Interest Period occurring during such
Related Month plus (iii) the Series 1997-3 Note Interest accruing during
the Series 1997-3 Interest Period occurring during such Related Month plus
(iv) the Series 1997-4 Note Interest accruing during the Series 1997-4
Interest Period occurring during such Related Month plus (v) the note
interest accruing during the Related Month with respect to any other
Shared Collateral Series plus (vi) all Carrying Charges for the Related
Month, and (b) the quotient obtained by dividing the Net Book Value of
such Financed Vehicle as of the last day of the Related Month by the Net
Book Value of all Vehicles leased under the Series 1997 Lease as of the
last day of the Related Month plus (II) 0.50% of the amount determined
pursuant to clause (I).
"Monthly Supplemental Payment", with respect to each Payment
Date and all Vehicles that were leased under the 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 or becomes a Casualty,
as applicable) of all the Financed Vehicles financed under this Financing
Lease at any time during such Related Month that, without double counting,
while so financed either are no longer Eligible Vehicles or have suffered
a Casualty during the Related Month, plus (ii) the aggregate Termination
Values (each as of the date on which such Financed Vehicle is sold or
returned by the Lessee) of all the Financed Vehicles financed under this
Financing Lease at any time during such Related Month that, without double
counting, are sold or returned by the Lessee during the Related Month (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 Manufacturer Program or to a
third party pursuant to an auction conducted through a Manufacturer's
Manufacturer Program plus (iii) the aggregate Termination Values (each as
of the applicable Disposition Date) of all the Financed Vehicles
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84
financed under this Finance Lease that while so financed were returned
to (a) a Manufacturer whose Manufacturer Program is a Guaranteed
Depreciation Program by the Lessee with respect to which, during the
Related Month, (x) the Repurchase Price has been deposited in the
Series 1997 Collection Account or, if for any reason the Repurchase
Price has been received directly by a Lessee, and such Repurchase
Price has not theretofore been deposited in the Series 1997 Collection
Account, the two Business Day period referred to in Section 24.12 of
the Base Lease has expired during the Related Month or (y) a
Manufacturer Event of Default has occurred or (z) the one hundredth
(100th) day after the Due Date with respect thereto has occurred and
the Repurchase Price has not been received or (b) any other applicable
Manufacturer by the Lessee with respect to which, during the Related
Month, (1) such Repurchase Price has been deposited in the Series 1997
Collection Account during the Related Month or, if for any reason the
Repurchase Price has been received directly by a Lessee and such
Repurchase Price has not theretofore been deposited in the Series 1997
Collection Account, the two Business Day period referred to in Section
24.12 of the Base Lease has expired during the Related Month or (2) a
Manufacturer Event of Default has occurred or (3) the Repurchase Price
has not been received as of the one hundredth (100th) day after the
Due Date with respect thereto has occurred and the Repurchase Price
has not been received, plus (iv) the aggregate face amount of all
Eligible Receivables financed under this Financing Lease with respect
to which, during the Related Month, (a) payment from the obligor
thereon has been deposited in the Series 1997 Collection Account
during the Related Month or, if for any reason such payment has been
received directly by a Lessee and such payment has not theretofore
been deposited in the Series 1997 Collection Account, the two Business
Day period referred to in Section 24.12 of the Base Lease has expired
during the Related Month or (b) a Manufacturer Event of Default has
occurred with respect to the obligor or (c) the one hundredth (100th)
day after the Due Date with respect thereto has occurred and the
payment due from the obligor thereon has not been received, minus (v)
any amounts received by the Lessor or the Trustee, or deposited into
the Series 1997 Collection Account, during the Related Month
representing (a) Repurchase Prices for repurchases of Financed
Vehicles or (b) the sales proceeds (including amounts paid to a Lessee
by a Manufacturer as a result of the Lessee's sale of such Vehicle
outside such Manufacturer's Manufacturer Program) for sales of
Financed Vehicles financed at the time of such sale under this Finance
Lease to a third party other than (1) to a Manufacturer or (2) through
an auction dealer of a Manufacturer whose Manufacturer Program is a
"guaranteed depreciation program" or (c) payments from obligors on
Eligible Receivables financed under the Financing Lease.
"Rent" means Monthly Base Rent plus Monthly Finance Rent plus
Additional Base Rent plus Monthly Supplemental Payments.
7. Payment of Rent and Other Payments. (a) On each Payment Date:
(i) Monthly Base Rent. After giving credit for all prepayments
on account thereof pursuant to (c) below, each Lessee shall pay to the
Lessor the Monthly Base Rents that have accrued during the Related Month
with respect to all Vehicles that were leased by such Lessee under the
Finance Lease on any day during the Related Month.
B-3
85
(ii) Monthly Finance Rent. After giving credit for all
prepayments on account thereof pursuant to (c) below, each Lessee
shall pay to the Lessor the Monthly Finance Rents that have accrued
during the Related Month with respect to all Vehicles that were leased
by such Lessee under the Finance Lease on any day during the Related
Month. On each other date on which Note Interest is due and payable
under the terms of a Series 1997 Variable Funding Supplement, each
Lessee shall pay to the Lessor, as Monthly Variable Rent, an amount
equal to the amount of Note Interest due and payable on such date in
respect of the Series 1997 Variable Funding Notes.
(iii) Additional Base Rent. After giving credit for all
prepayments on account thereof pursuant to (c) below, each Lessee
shall pay to the Lessor an amount equal to the product of (A) the
monthly Additional Base Rent that has accrued during the Related Month
with respect to the Non-Program Vehicles leased under this Lease by
the Lessees and (B) a fraction, the numerator of which is the Net Book
Value of all Non-Program Vehicles leased by such Lessee under the
Financing Lease and the denominator of which is the Net Book Value of
all Non-Program Vehicles leased by the Lessees under this Lease; and
(iv) Monthly Supplemental Payment. After giving credit for all
prepayments on account thereof pursuant to (c) below, each Lessee
shall pay to the Lessor the Monthly Supplemental Payment that has
accrued during the Related Month,.
(b) On the expiration of the term of the Series 1997 Lease with
respect to a Financed Vehicle, any remaining Base Amount, plus all other
amounts payable by any Lessee under the Financing Lease with respect to any
Vehicle leased by such Lessee shall be immediately due and payable.
(c) On any date, 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 Financed Vehicles leased by such Lessee.
8. Risk of Loss Borne by Lessees. Upon delivery of each Vehicle to
the applicable Lessee, as between the Lessor and the Lessee, the Lessee assumes
and bears the risk of loss, damage, theft, taking, destruction, attachment,
seizure, confiscation or requisition with respect to such Vehicle, however
caused or occasioned, and all other risks and liabilities, including personal
injury or death and property damage, arising with respect to any Vehicle or the
manufacture, purchase, acceptance, rejection, ownership, delivery, leasing,
possession, use, inspection, registration, operation, condition, repair,
storage, sale, return or other disposition of such Vehicle, howsoever arising.
9. Mandatory Repurchase of Company Vehicles. Prior to the Vehicle
Lease Expiration Date with respect to each Company Vehicle (other than a
Vehicle Lease Expiration Date arising in connection with the purchase of such
Company Vehicle pursuant to this Section 9), the Lessee of a Company Vehicle
shall purchase such Company Vehicle (including any such Vehicle which has
become a Casualty or has ceased to be an Eligible Vehicle) at a purchase price
equal to the Net Book Value of such Vehicle calculated as of the date of
purchase (or, in the case of a Casualty or a Vehicle that has ceased to be an
Eligible Vehicle, at a purchase price equal to the Monthly Supplemental
B-4
86
Payments accruing in respect of such Vehicle during the Related Month in which
such Vehicle became a Casualty or ceased to be an Eligible Vehicle), which
shall be payable to the Master Collateral Agent by deposit to the Master
Collateral Account (together with all accrued and unpaid Rent and other charges
and payments due and payable on such Payment Date with respect to such Company
Vehicle through the date of such purchase) on or prior to the Payment Date next
succeeding such purchase by the Lessee. Upon receipt of such purchase price by
the Lessor or the Master Collateral Agent, the Lessor shall, at the request of
the Lessee, cause title to each Company Vehicle to be transferred to the
Lessee, the lien of the Master Collateral Agent in such Company Vehicle will
automatically be released and the Servicer shall cause the Master Collateral
Agent to cause the notation of its lien to be removed from the Certificate of
Title for such Vehicle, concurrently with or promptly after such purchase price
for such Company Vehicle (and any such unpaid Rent, charges and payments) is
paid by the Lessee to the Master Collateral Agent. Notwithstanding anything to
the contrary in this Lease, no Company Vehicle may be sold or otherwise
disposed of (other than pursuant to Section 17.3 of the Base Lease), including
at auction or by return to its Manufacturer pursuant to a Manufacturer Program,
prior to its purchase by the Lessee pursuant to and in accordance with this
Section 9.
10. Non-Disturbance. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Financed Vehicles
will not be disturbed during the Term, except that the Lessor, the Master
Collateral Agent, and the Trustee each retains the right, but not the duty, to
inspect the Vehicles without disturbing the ordinary conduct of such Lessee's
business in accordance with Section 24.2 of the Base Lease.
11. Liens. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it free of all Liens arising during the Term. The Lessor may
grant security interests in the Master Collateral to the Master Collateral
Agent, and in this Lease and the other Series 1997 VFN Collateral to the
Trustee, in accordance with the Master Collateral Agency Agreement and the
Indenture, and each Series 1997 Variable Funding Noteholder may grant security
interests in its Series 1997 Variable Funding Notes, the Series 1997 Variable
Funding Supplements and the other Assigned Collateral to certain of its
creditors without consent of any Lessee. Each Lessee acknowledges that the
granting of Liens and the taking of other actions pursuant to the Indenture and
the Related Documents does not interfere with the rights of the Lessee under
the Financing Lease.
12. 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 Lease, 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 Master Collateral Agent on or
before the Payment Date next succeeding such purchase by the Lessee. Upon
receipt of such funds by the Master Collateral Agent, the Lessor, at the
request of the Lessee, shall cause title to any such Manufacturer Receivable to
be transferred to the Lessee, the lien of the Master Collateral Agent in such
Manufacturer Receivable will automatically be released concurrently with or
promptly after the purchase price for such Manufacturer Receivable (and any
unpaid Monthly Base Rent, unpaid Monthly Variable Rent and other unpaid
charges, payments and amounts) is paid by the Lessee to the Master Collateral
Agent or the Trustee.
B-5
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***
B-6
88
ANNEX C
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer,
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer,
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
89
1. Scope of Annex. This Annex C shall apply only to the acquisition,
leasing and servicing of the Synthetic Lease Vehicles by the Lessees pursuant
to the Base Lease, as supplemented by this Lease Annex (collectively, the
"Synthetic Lease").
2. General Agreement. (a) Each Lessee and the Lessor each intend that
this Agreement constitute an operating lease for accounting purposes and a
financing arrangement for tax purposes and that the relationship between the
Lessor and each Lessee pursuant hereto shall always be only that of lessor and
lessee, and the Lessor hereby declares, acknowledges and agrees that the tax
ownership of the Synthetic Lease Vehicles rests solely with the applicable
Lessee subject to the security interest granted hereunder and under the Master
Collateral Agency Agreement. The Lessor and each Lessee further agree that the
obligations of each such Lessee to the Lessor hereunder shall constitute debt
for all federal and state income tax purposes.
(b) It is the intention of the parties that this Agreement together with
the Master Collateral Agency Agreement shall constitute a security agreement
under applicable law.
3. Synthetic Lease Commitment. Upon the execution and delivery of this
Synthetic Lease, the Lessor shall, subject to the terms and conditions of the
Agreement, purchase from time to time on or after the Lease Commencement Date
and prior to the Lease Expiration Date, all Synthetic Lease Vehicles identified
in Vehicle Orders placed by each Lessee for a purchase price equal to the
Acquisition Price thereof, and simultaneously therewith, the Lessor shall under
the Synthetic Lease enter into synthetic leases with the applicable Lessee with
respect to such Vehicles; provided, that the aggregate Net Book Value of
Synthetic Lease Vehicles leased under this Synthetic Lease, plus past due
Monthly Base Rent under this Synthetic Lease, shall not on any date exceed the
Maximum Lease Commitment reduced by (a) the Base Amount as of such date with
respect to the Operating Lease and (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
Synthetic Lease as it relates to each Synthetic Lease 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,
however, the maximum Vehicle lease term of the Synthetic Lease as it relates to
any Synthetic Lease Vehicle titled in the state of Illinois shall be from the
Vehicle Lease Commencement Date to the date that is three hundred and
sixty-four (364) days from the Vehicle Lease Commencement Date; provided,
further, that if on such three hundred sixty-fourth (364th) day, the Vehicle
lease term for any Synthetic Lease Vehicle titled in the State of Illinois has
not theretofore been terminated, and the Vehicle lease term for such Synthetic
Lease Vehicle has not previously been terminated and renewed pursuant to this
Paragraph 5, the Vehicle lease term as it relates to such Synthetic Lease
Vehicle shall be deemed to have been terminated and renewed for an additional
Vehicle lease term of up to three hundred sixty four (364) days). On the
occurrence of such date for a Synthetic Lease Vehicle not previously disposed
of or purchased by the applicable Lessee in accordance with the terms hereof,
the Lessee shall, (a) on behalf of the Lessor, promptly dispose of such Vehicle
in accordance with the terms of this Synthetic Lease and in accordance with any
instructions of the Lessor for such disposition, which instructions shall not
be inconsistent with
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90
the terms of this Lease, (b) in each case, provide that Disposition Proceeds be
paid directly to the Master Collateral Account for the benefit of the Trustee
and (c) pay to the Master Collateral Agent or the Trustee, in accordance with
this Synthetic 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. (a) Each Lessee will have the
option, exercisable with respect to any Synthetic Lease Vehicle leased by it
during the Vehicle Term with respect to such Synthetic Lease Vehicle, to
purchase any Synthetic Lease Vehicle leased under this Lease at the Vehicle
Purchase Price, in which event such Lessee will pay the Vehicle Purchase Price
to the Master Collateral Agent on or before the Payment Date next succeeding
such purchase by such Lessee plus all accrued and unpaid Monthly Base Rent and
Monthly Variable Rent and any other charges, payments and amounts due and
payable hereunder on such Payment Date 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 Synthetic
Lease Vehicle which was leased by such Lessee under this Lease, 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 Master Collateral Agent on or before the Payment Date
next succeeding such purchase by the Lessee. Upon receipt of such funds by the
Master Collateral Agent, the Lessor, at the request of the Lessee, shall cause
title to any such Vehicle or Manufacturer Receivable, as applicable, to be
transferred to the Lessee, the lien of the Master Collateral Agent in such
Vehicle or Manufacturer Receivable, as applicable, will automatically be
released and, with respect to a purchase of a Vehicle, the Servicer thereof
shall cause the Master Collateral Agent to cause the notation of its lien to be
removed from the certificate of title for such Vehicle, concurrently with or
promptly after the Vehicle Purchase Price for such Vehicle (and any unpaid
Monthly Base Rent, unpaid Monthly Variable Rent and any other unpaid charges,
payments and amounts) are paid by such Lessee to the Master Collateral Agent.
(b) Each Lessee shall have the option on the Vehicle Lease Expiration
Date (unless such Lessee has purchased such Vehicle pursuant to Section 6(a))
to purchase any Synthetic Lease Vehicle leased by it under this Lease for an
amount equal to the Termination Value of such Vehicle on such date. Such Lessee
shall pay such Termination Value plus all accrued and unpaid Monthly Base Rent,
unpaid Monthly Variable Rent and any other unpaid charges, payments and amounts
with respect to such Vehicle to the Master Collateral Agent on the Payment Date
occurring on or immediately following the applicable Vehicle Lease Expiration
Date.
7. Program Vehicle Disposition. Subject to Sections 6 and 11 hereof, the
Lessor and each Lessee agree that, with respect to Synthetic Lease Vehicles
that are Program Vehicles, the Lessee shall, pursuant to Section 24.6 of the
Base Lease (unless not required by such Section), deliver each Vehicle for sale
at auction or return each Program Vehicle to the related Manufacturer, in each
case in accordance with the applicable Manufacturer Program during the
Repurchase Period for such Vehicle; provided, however, if for any reason, such
Lessee fails to deliver a Program Vehicle to the applicable Manufacturer for
repurchase by the Manufacturer or to an auction for sale, in each case in
accordance with the applicable Manufacturer Program, during the Repurchase
Period, and such Lessee does not or is not entitled to redesignate such Program
Vehicle as a Non-Program Vehicle in accordance with Section 14 of the Base
Lease, then such Lessee shall be obligated to pay a
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Casualty Payment in respect of such Vehicle, as provided in Section 7 of the
Base Lease. Each Lessee shall, with respect to Synthetic Lease Vehicles that
are Program Vehicles, pay any Monthly Variable Rent accrued with respect to
such Vehicle through the date of return, plus pay the equivalent of the Monthly
Base Rent for the minimum holding period under the applicable Manufacturer
Program for Vehicles returned before the expiration of such minimum holding
period, regardless of actual usage, unless such minimum holding period is
waived by the Manufacturer or such a Vehicle is a Casualty or ceased to be an
Eligible Vehicle, in which case Section 7 of the Base Lease shall apply with
respect to such Vehicle. All Repurchase Prices and Disposition Proceeds due
from the disposition of Vehicles pursuant to this Section shall be due and
payable to the Lessor and shall be deposited to the Master Collateral Account.
The Lessor and each Lessee agree, with respect to Synthetic Lease Vehicles that
are Non-Program Vehicles, that the Lessee thereof shall use commercially
reasonable efforts to dispose of each Non-Program Vehicle leased by it
hereunder (a) in a manner reasonably likely to maximize proceeds from such
disposition and consistent with industry practice and (b) within forty-two (42)
months after the date of the original dealer invoice for such Vehicle sold as a
new vehicle. All Disposition Proceeds due from the disposition of Non-Program
Vehicles pursuant to this Section shall be due and payable to the Lessor and
shall be deposited into the Master Collateral Account.
8. Lessor's Right to Cause Vehicles to be Sold. If any Lessee does not
elect to purchase such Vehicle pursuant to Section 6 hereof, then subject to
such Lessee's right, if any, to redesignate such Vehicle as a Non-Program
Vehicle pursuant to Section 14 of the Base Lease and to Section 11 hereof, the
Lessor shall have the right, at any time after the date fourteen (14) days
prior to the expiration of the Repurchase Period for any Program Vehicle leased
under this Synthetic Lease, to require that such Lessee deliver such Program
Vehicle to the Manufacturer for repurchase or, as applicable, to the designated
auction for sale, or exercise commercially reasonable efforts to arrange for
the sale of such Program Vehicle to a third party for a price greater than the
Net Book Value thereof, in which event such Lessee shall, prior to the
expiration of such Repurchase Period, deliver such Program Vehicle to its
Manufacturer or the designated auction or arrange for the sale of such Program
Vehicle to a third party for a price greater than the Net Book Value (or
purchase the Program Vehicle itself from the Lessor for the Vehicle Purchase
Price). If a sale of the Program Vehicle is arranged by such Lessee prior to
the expiration of such Repurchase Period, then such Lessee shall deliver the
Program Vehicle to the purchaser thereof, the Lien of the Master Collateral
Agent on the Certificate of Title of such Program Vehicle shall be released,
and such Lessee shall cause to be delivered to the Lessor the funds paid for
such Program Vehicle by the purchaser. If any Lessee is unable to arrange for a
sale of the Program Vehicle prior to the expiration of such Repurchase Period,
then such Lessee shall cease attempting to arrange for such a sale and shall
return such Program Vehicle in the manner provided in Section 11(a)(y) hereof.
If any Lessee shall fail to satisfy any provision of Section 11(a)(y) hereof or
11(b) hereof, then such Lessee shall purchase such vehicle by paying within
five (5) days after the Vehicle Lease Expiration Date the amount of the
Termination Value of such Program Vehicle immediately prior to such Vehicle
Lease Expiration Date (rather than the Residual Value Payment required by
Section 8(c)), plus any unpaid Monthly Base Rent, unpaid Monthly Variable Rent
and other unpaid charges, payments and amounts due in respect of such Vehicle.
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(b) If the Lessee thereof does not elect to purchase a Non-Program
Vehicle leased under this Synthetic Lease Pursuant to Section 6 hereof, the
Lessor and the Lessee agree that the Lessee shall use commercially reasonable
efforts to arrange for the sale of each such Non-Program Vehicle to a third
party for the Vehicle Purchase Price with respect to such Non-Program Vehicle
on or prior to the related Vehicle Synthetic Lease Expiration Date. In no event
may any Non- Program Vehicle be sold pursuant to this Section 8(b) unless the
funds to be paid to the Lessor with respect to such Non-Program Vehicle (net of
any disposition expenses) equal or exceed the Termination Value of such
Non-Program Vehicle, plus any unpaid Monthly Base Rent, unpaid Monthly Variable
Rent and other unpaid charges, payments and amounts due in respect of such
Vehicle. Notwithstanding the Lessee's disposition of a Synthetic Lease Vehicle
which is a Non-Program Vehicle on or prior to the related Vehicle Synthetic
Lease Expiration Date, the Lessee shall pay to the Lessor all accrued and
unpaid Monthly Base Rent due with respect to such Non- Program Vehicle, unless
such Non-Program Vehicle is a Casualty or ceases to be an Eligible Vehicle, in
which event the provisions of Section 7 of the Base Lease will apply.
(c) In the event any Vehicle is not purchased by the applicable Lessee
pursuant to Section 6 hereof or sold pursuant to Section 8(a) or (b) above,
then such Lessee shall return the Vehicle to the Lessor or dispose of the same
in accordance with Section 11(a)(y), 11(b) or 11(c) hereof, as the case may be,
on the Payment Date with respect to the Related Month in which the applicable
Vehicle Lease Expiration Date falls, and with respect to returns under Section
11(a)(y), such Lessee shall pay an amount equal to the Residual Value Payment
plus all accrued but unpaid Monthly Base Rent and Monthly Variable Rent and
other unpaid charges, payments and amounts due and payable hereunder with
respect to such Vehicle through such Payment Date. In no event may any Vehicle
be sold pursuant to this Section 8 (other than pursuant to a Manufacturer
Program) unless such sale complies with Section 12.2 of the Base Lease.
9. Calculation of Rent. Rent shall be due and payable on a monthly basis
as set forth in this Section 9:
"Additional Base Rent" with respect to the Non-Program Vehicles
leased hereunder, with respect to each Payment Date shall equal the
amount, if any, by which (a) 100% of the aggregate Net Book Value of such
Non-Program Vehicles leased under this Lease on the last day of the
Related Month exceeds (b) the three (3) month rolling average of the Fair
Market Value of such Non-Program Vehicles for the preceding three (3)
calendar months.
"Monthly Base Rent", with respect to each Payment Date and each
Synthetic Lease Vehicle leased under the Lease on any day during the
Related Month, shall be the sum of all Depreciation Charges that have
accrued with respect to such Vehicle during the Related Month.
"Monthly Variable Rent", with respect to each Payment Date and
each Synthetic Lease Vehicle leased under the Lease on any day during the
Related Month, shall equal the sum of (I) the product of (a) an amount
equal to the sum, without double counting, of (i) the Series 1997-1 Note
Interest accruing during the Series 1997-1 Interest Period occurring
during such Related Month plus (ii) the Series 1997-2 Note Interest
accruing during the
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Series 1997-2 Interest Period occurring during such Related Month plus
(iii) the Series 1997-3 Note Interest accruing during the Series 1997-3
Interest Period occurring during such Related Month plus (iv) the Series
1997-4 Note Interest accruing during the Series 1997-4 Interest Period
occurring during such Related Month plus (v) the note interest accruing
during the Related Month with respect to any other Shared Collateral
Series plus (vi) all Carrying Charges for the Related Month, and (b) the
quotient obtained by dividing the Net Book Value of such Synthetic Lease
Vehicle as of the last day of the Related Month by the Net Book Value of
all Vehicles leased under the Lease as of the last day of the Related
Month plus (II) 0.50% of the amount determined pursuant to clause (I).
"Rent" means Monthly Base Rent plus Monthly Variable Rent plus
Additional Base Rent plus Additional Synthetic Lease Payments.
10. Payment of Rent and Other Payments.
(a) Monthly Base Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below, each
Lessee shall pay to the Lessor the Monthly Base Rents that have accrued
during the Related Month with respect to all Vehicles that were leased by
such Lessee under the Synthetic Lease on any day during the Related Month;
(b) Monthly Variable Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below, each
Lessee shall pay to the Lessor the Monthly Variable Rents that have
accrued during the Related Month with respect to all Vehicles that were
leased by such Lessee under the Synthetic Lease on any day during the
Related Month. On each other date on which Note Interest is due and
payable under the terms of a Series 1997 Variable Funding Supplement, each
Lessee shall pay to the Lessor, as Monthly Variable Rent, an amount equal
to the amount of Note Interest due and payable on such date in respect of
the Series 1997 Variable Funding Notes.
(c) Additional Synthetic Lease Payments. On each Payment Date,
after giving credit for all prepayments on account thereof pursuant to (f)
below, each Lessee shall pay to the Lessor all payments due on such
Payment Date pursuant to the provisions of Sections 8 and 11 of this Annex
C ("Additional Synthetic Lease Payments"); and
(d) Additional Base Rent. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee shall
pay to the Lessor an amount equal to the product of (A) the monthly
Additional Base Rent that has accrued during the Related Month with
respect to the Non-Program Vehicles leased under this Lease by the Lessees
and (B) a fraction, the numerator of which is the Net Book Value of all
Non-Program Vehicles leased by such Lessee under the Synthetic Lease and
the denominator of which is the Net Book Value of all Non-Program Vehicles
leased by the Lessees under this Lease; and
(e) Certain Other Payments. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee shall
direct all Repurchase Prices and Disposition
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Proceeds payable in respect of Synthetic Lease Vehicles, to be
deposited directly to the Master Collateral Account for the benefit of
the Trustee. Each Servicer and each Lessee agrees that in the event
that any such Servicer or any such Lessee shall receive directly any
such payment, including cash, securities, obligations or other
property, the Servicer or the Lessee, as the case may be, shall accept
the same as the agent of the Master Collateral Agent and shall hold
the same in trust on behalf of and for the benefit of the Master
Collateral Agent, and shall deposit the same, by the date required for
such deposit in Section 24.12 of the Base Lease, into the Master
Collateral Account in the same form received, with the endorsement of
the Servicer or the Lessee, as the case may be, when necessary or
appropriate.
(f) Prepayments. On any date, 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 Synthetic Lease Vehicles leased
by such Lessee.
11. Return. (a) On or prior to the date that is ninety (90) days
prior to the end of the Term of this Lease, each Lessee shall notify the Lessor
in writing if it elects to purchase all the Synthetic Lease Vehicles leased by
such Lessee at the end of the Term of this Lease pursuant to Section 6. If any
Lessee does not elect to purchase all the Synthetic Lease Vehicles leased by
such Lessee pursuant to the terms of Section 6, as long as no Lease Event of
Default shall have occurred and be continuing, such Lessee shall, on or prior
to the Lease Expiration Date (x) pay to the Master Collateral Account an amount
equal to the Residual Value Payment for all such non-purchased Synthetic Lease
Vehicles leased by it hereunder as of the Vehicle Lease Expiration Date for
each such Vehicle plus all accrued but unpaid Monthly Base Rent and all Monthly
Variable Rent payable at such time and (y) return each such Synthetic Lease
Vehicle to the Lessor in accordance with the following, as applicable:
(1) each such Synthetic Vehicle shall:
(A) have an engine, transmission, differential, exhaust
system (including the catalytic converter and any other pollution
control equipment), brakes, and any other operating part or system or
accessory which is necessary or advisable to be in an operating
condition which is generally considered as "good" for a vehicle of
such Vehicle's age, and/or which is necessary to enable such Vehicle
to meet any motor vehicle inspection standard or environmental
standard applicable to such Vehicle on its Vehicle Lease Expiration
Date;
(B) be in a condition which would meet its next inspection as
required by such applicable federal, state or local law;
(C) other than any condition that would reasonably be
considered to be normal wear and tear or otherwise de minimis by a
Manufacturer (or its authorized agent) accepting possession of a
Vehicle subject to its Manufacturer Program: have no body dents, rust,
corrosion, paint mismatches or special colors, or paint which is less
than factory grade, dented, rusted, broken, missing chrome or trim,
ripped or stained, upholstery, seats, dash,
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headliner, carpeting, trunk, or convertible vinyl top, missing
interior trim, sprung or misaligned doors or their openings, or worn,
cracked, split, broken or leaking weatherstripping, faulty window
mechanisms, or broken, cracked, missing glass, mirrors or lights,
faulty electronic systems, including on-board computers, processors,
sensors, controls, radios, stereos, and the like, faulty heating, air
conditioning or climate control systems, worn or faulty shock
absorbers or other suspension or steering parts, systems or
mechanisms;
(D) have an engine that does not burn an abnormal amount of
oil for a vehicle of comparable age or mileage, and there shall be no
uneven compression ratios across cylinders; no fluid leaks in the
engine, transmission(s), differential(s), steering mechanism, brake
system, or cooling system, faulty hoses, or faulty exhaust systems;
(E) have all accessories, insignia, decals, lettering or
special identification, or other auxiliary equipment or markings on
the body, fenders, bumpers, dash or elsewhere removed and there must
be no holes left by the removal thereof;
(F) have tires which:
I. are comparable to those initially delivered
with such Vehicle in design and quality;
II. are in accordance with the specifications of
the manufacturer of the Vehicles;
III. are part of a matching set of four, plus spare
(which may be a "donut" if a "donut" spare is initially
delivered with such Vehicle);
IV. have no less than 1/8 inch in tread remaining at
its shallowest point, show an excess wear marker built in by
its manufacturer; and
V. have no obvious defect;
(G) have wheels which:
I. are comparable to those initially delivered
with such Vehicle in design and quality;
II. are in accordance with the specifications of
the manufacturer of the Vehicle;
III. are part of a matching set of four, plus spare
(which may be a "donut" if a "donut" spare is initially
delivered with such Vehicle); and
IV. have no obvious defect; and
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(H) be in Vehicle Turn-In Condition.
(b) Each Lessee will return each Synthetic Vehicle leased by it which
is a Program Vehicle (other than Casualties and Vehicles that have ceased to be
Eligible Vehicles) to the nearest related Manufacturer official auction or
other facility designated by such Manufacturer at such Lessee's sole expense or
to such other location designated by the Lessor, (with any additional cost of
delivery in excess of what would have been incurred upon delivery to the
related Manufacturer for the account of the Lessor), in each case in accordance
with the requirements of Section 7 hereof.
(c) Each Lessee will, subject to Section 6, dispose of each
Non-Program Vehicle (other than Casualties and Vehicles that have ceased to be
Eligible Vehicles) in accordance with the requirements of Section 8(b) hereof.
(d) Any rebates or credits applicable to the unexpired term of any
license plates for a Synthetic Lease Vehicle shall inure to the benefit of the
applicable Lessee.
(e) If any Lessee shall fail to satisfy any provision of Section 11(a)
of this Annex C, then such Lessee shall purchase the outstanding Synthetic
Lease Vehicles by paying within five (5) days after the end of the Term of this
Agreement the aggregate of the Termination Values of all the Synthetic Lease
Vehicles subject to this Lease immediately prior to the end of the Term (rather
than the Residual Value Payment required by subclause (x) of Section 11(a)
hereof).
12. Net Lease. THE SYNTHETIC LEASE SHALL BE A NET LEASE, AND EACH
LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE
AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR
ANY REASON WHATSOEVER. The obligations and liabilities of each Lessee hereunder
shall in no way be released, discharged or otherwise affected (except as may be
expressly provided herein including, without limitation, the right of the
Lessee to reject Vehicles pursuant to Section 2.2 of the Base Lease) for any
reason, including without limitation: (i) any defect in the condition,
merchantability, quality or fitness for use of the Vehicles or any part
thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping or
destruction of or any requisition or taking of the Vehicles or any part
thereof; (iii) any restriction, prevention or curtailment of or interference
with any use of the Vehicles or any part thereof; (iv) any defect in, or any
Lien on, title to the Vehicles or any part thereof; (v) any change, waiver,
extension, indulgence or other action or omission in respect of any obligation
or liability of the Lessee or the Lessor; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Lessee, the Lessor or any other Person, or any
action taken with respect to the Synthetic Lease by any trustee or receiver of
any Person mentioned above, or by any court; (vii) any claim that the 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 Synthetic 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 Lessee or otherwise; (x) any insurance
premiums payable by the Lessee with respect to the Vehicles; or (xi) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not the
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Lessee shall have notice or knowledge of any of the foregoing and whether or
not foreseen or foreseeable. The Synthetic 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 Synthetic Lease, or to any
diminution or reduction of Rent payable by such Lessee hereunder. All payments
by a 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 Synthetic Lease shall be terminated in whole or in part by operation of law
or otherwise except as expressly provided herein, each Lessee shall nonetheless
pay an amount equal to each Rent payment at the time and in the manner that
such payment would have become due and payable under the terms of the Synthetic
Lease as if it had not been terminated in whole or in part. All covenants and
agreements of the any Lessee herein shall be performed at its cost, expense and
risk unless expressly otherwise stated.
13. Liens. Except for Permitted Liens, each Lessee shall keep all
Synthetic Lease Vehicles leased by it free of all Liens arising during the
Term. Upon the Vehicle Lease Expiration Date for each Synthetic Lease Vehicle
leased hereunder, the Lessor may, in its discretion, remove any 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 applicable
Lessee upon demand by the Lessor. The Lessor may grant security interests in
the other Master Collateral to the Master Collateral Agent, and in this Lease
and the other Series 1997 VFN Collateral to the Trustee, in accordance with the
Master Collateral Agency Agreement and the Indenture, and each Series 1997
Variable Funding Noteholder may grant security interests in its Series 1997
Variable Funding Notes, the Series 1997 Variable Funding Supplements and the
other Assigned Collateral to certain of its creditors without the consent of
any Lessee. Each Lessee acknowledges that the granting of Liens and the taking
of other actions pursuant to the Indenture and the Related Documents does not
interfere with the rights of the Lessee under the Synthetic Lease.
14. Non-Disturbance. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Synthetic Lease
Vehicles will not be disturbed during the Term subject, however, to Section 8
of this Annex C and except that the Lessor, the Master Collateral Agent, and
the Trustee each retains the right, but not the duty, to inspect the Vehicles
without disturbing the ordinary conduct of such Lessee's business in accordance
with Section 24.2.
15. Risks of Loss Borne by Lessees. Upon delivery of each Synthetic
Lease Vehicle to the applicable Lessee, as between the Lessor and the Lessee,
the 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 Synthetic Lease Vehicle, however
caused or occasioned, including personal injury or death and property damage,
arising with respect to any Synthetic Lease Vehicle due to the manufacturer,
purchase, acceptance, rejection, delivery, leasing, possession, use,
inspection, registration, operation, condition, maintenance, repair or storage
of such Synthetic Lease Vehicle, howsoever arising.
* * *
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