[AESOP I Finance
Lease Loan Agreement]
--------------------------------------------------------------------------------
LOAN AGREEMENT
dated as of July 30, 1997
between
AESOP LEASING L.P.,
as Borrower,
and
AESOP FUNDING II L.L.C.,
as Lender
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
SECTION 1. CERTAIN DEFINITIONS................................................................... 3
SECTION 1.1. Certain Definitions........................................... 3
SECTION 1.2. Accounting and Financial Determinations....................... 3
SECTION 1.3. Cross References; Headings.................................... 3
SECTION 1.4. Interpretation................................................ 4
SECTION 2. LOAN COMMITMENT OF THE LENDER............................................... 4
SECTION 2.1. Loan Commitment............................................... 4
SECTION 2.2. Certain Waivers............................................... 5
SECTION 2.3. Conditions.................................................... 5
SECTION 2.4. Use of Proceeds............................................... 5
SECTION 3. LOAN NOTE; LOAN PROCEDURE;
RECORDKEEPING............................................................... 6
SECTION 3.1. Loan Note..................................................... 6
SECTION 3.2. Loan Procedure................................................ 6
SECTION 3.3. Recordkeeping................................................. 7
SECTION 4. INTEREST.................................................................... 7
SECTION 4.1. Interest Rate on Loans........................................ 7
SECTION 4.2. Supplemental Interest......................................... 8
SECTION 4.3. Loan Interest Payment Dates................................... 8
SECTION 4.4. Setting of Rates.............................................. 8
SECTION 4.5. Carrying Charges.............................................. 9
SECTION 5. REPAYMENT OF LOAN PRINCIPAL AMOUNT.......................................... 9
SECTION 5.1. Mandatory Repayment of Monthly
Loan Principal Amount of Loans................................ 9
SECTION 5.2. Voluntary Prepayments of Loan
Principal Amount.............................................. 10
SECTION 6. MAKING OF PAYMENTS.......................................................... 11
SECTION 6.1. Making of Payments............................................ 11
SECTION 6.2. Due Date Extension............................................ 11
SECTION 6.3. Application of Sale Proceeds.................................. 11
SECTION 6.4. Payment Deficits.............................................. 12
SECTION 7. LOAN COLLATERAL SECURITY.................................................... 12
SECTION 7.1. Grant of Security Interest.................................... 12
SECTION 7.2. Certificates of Title......................................... 14
i
SECTION 7.3. Release of AESOP I Finance Lease
Loan Collateral............................................... 14
SECTION 7.4. Change of Location or Name.................................... 16
SECTION 7.5. Deliveries; Further Assurances................................ 16
SECTION 7.6. [RESERVED].................................................... 17
SECTION 7.7. [RESERVED].................................................... 17
SECTION 7.8. AESOP I Segregated Account.................................... 17
SECTION 8. REPRESENTATIONS AND WARRANTIES.............................................. 17
SECTION 8.1. Organization; Ownership; Power;
Qualification................................................. 18
SECTION 8.2. Authorization; Enforceability................................. 18
SECTION 8.3. Compliance.................................................... 18
SECTION 8.4. [RESERVED].................................................... 18
SECTION 8.5. Litigation.................................................... 19
SECTION 8.6. Liens......................................................... 19
SECTION 8.7. Employee Benefit Plans........................................ 19
SECTION 8.8. Investment Company Act........................................ 19
SECTION 8.9. Regulations G, T, U and X..................................... 19
SECTION 8.10. Proceeds...................................................... 20
SECTION 8.11. Business Locations; Trade Names............................... 20
SECTION 8.12. Taxes......................................................... 20
SECTION 8.13. Governmental Authorizations................................... 20
SECTION 8.14. Compliance with Laws.......................................... 21
SECTION 8.15. Eligible Vehicles............................................. 21
SECTION 8.16. Manufacturer Programs......................................... 21
SECTION 8.17. Absence of Default............................................ 21
SECTION 8.18. No Security Interest; Title to
Assets........................................................ 22
SECTION 8.19. Accuracy of Information....................................... 22
SECTION 9. AFFIRMATIVE COVENANTS....................................................... 23
SECTION 9.1. Existence; Foreign Qualifica-
tion.......................................................... 23
SECTION 9.2. Books, Records and Inspections................................ 23
SECTION 9.3. Insurance..................................................... 24
SECTION 9.4. Manufacturer Programs......................................... 24
SECTION 9.5. Reporting Requirements........................................ 25
SECTION 9.6. Payment of Taxes; Removal of
Liens......................................................... 26
SECTION 9.7. Business...................................................... 26
SECTION 9.8. Maintenance of the Vehicles................................... 26
SECTION 9.9. Maintenance of Separate Existence............................. 26
SECTION 9.10. Manufacturer Payments; Sales
Proceeds...................................................... 29
SECTION 9.11. Maintenance of Properties..................................... 30
ii
SECTION 9.12. Verification of Title......................................... 30
SECTION 9.13. [RESERVED].................................................... 30
SECTION 9.14. Delivery of Information....................................... 31
SECTION 9.15. [RESERVED].................................................... 31
SECTION 9.16. Vehicles...................................................... 31
SECTION 9.17. Assignments................................................... 31
SECTION 9.18. Notation of Liens............................................. 31
SECTION 9.19. [RESERVED].................................................... 31
SECTION 9.20. [RESERVED].................................................... 31
SECTION 9.21. [RESERVED].................................................... 32
SECTION 9.22. [RESERVED].................................................... 32
SECTION 9.23. Sale of Non-Program Vehicles
Returned to AESOP Leasing.................................... 32
SECTION 10. NEGATIVE COVENANTS.......................................................... 32
SECTION 10.1. Liens......................................................... 32
SECTION 10.2. Other Indebtedness............................................ 32
SECTION 10.3. Mergers, Consolidations....................................... 32
SECTION 10.4. Sales of Assets............................................... 32
SECTION 10.5. Acquisition of Assets......................................... 32
SECTION 10.6. Dividends, Officers' Compensation, etc........................ 32
SECTION 10.7 Organizational Documents...................................... 33
SECTION 10.8 Investments................................................... 33
SECTION 10.9. Regulations G, T, U and X..................................... 33
SECTION 10.10. Other Agreements.............................................. 33
SECTION 10.11. Use of Vehicles............................................... 33
SECTION 10.12. Use of Proceeds............................................... 33
SECTION 10.13. Limitations on the Acquisition
or Redesignation of Certain
Vehicles...................................................... 34
SECTION 10.14. Maximum Vehicle Age........................................... 34
SECTION 11. CONDITIONS.................................................................. 34
SECTION 11.1. Initial Loans................................................. 34
SECTION 11.2. All Loans..................................................... 37
SECTION 12. LOAN EVENTS OF DEFAULT AND THEIR EFFECT..................................... 38
SECTION 12.1. AESOP I Finance Lease Loan
Events of Default............................................. 38
SECTION 12.2. Effect of AESOP I Finance Lease
Loan Event of Default or Liquidation Event of Default......... 39
SECTION 12.3. Rights of Trustee Upon Liquidation Event of Default and Non-
Performance of Certain Covenants.............................. 40
iii
SECTION 12.4. Application of Proceeds....................................... 41
SECTION 13. GENERAL..................................................................... 42
SECTION 13.1. Waiver; Amendments............................................ 42
SECTION 13.2. Confirmations................................................. 42
SECTION 13.3. Notices....................................................... 42
SECTION 13.4. Taxes......................................................... 42
SECTION 13.5. Indemnification............................................... 43
SECTION 13.6. Bankruptcy Petition........................................... 44
SECTION 13.7. Submission to Jurisdiction.................................... 45
SECTION 13.8. Governing Law................................................. 46
SECTION 13.9. JURY TRIAL.................................................... 46
SECTION 13.10. Successors and Assigns........................................ 46
SECTION 13.11. Tax Treatment of Loans........................................ 47
SECTION 13.12. No Recourse................................................... 47
EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF LOAN NOTE
EXHIBIT B-1 FORM OF LOAN REQUEST
EXHIBIT B-2 FORM OF LOAN REQUEST RESPONSE
EXHIBIT C FORM OF PAYMENT DEFICIT NOTICE
SCHEDULE 8.11 BUSINESS LOCATIONS, TRADE NAMES
iv
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 30, 1997 (the
"Agreement"), is entered into between AESOP LEASING L.P., a Delaware limited
partnership ("AESOP Leasing" or the "Borrower"), and AESOP FUNDING II L.L.C.,
a Delaware limited liability company ("AFC-II" or the "Lender").
BACKGROUND
AESOP Leasing intends to finance the purchase of Program
Vehicles (such capitalized term, together with all other capitalized terms
used herein, shall have the meaning assigned thereto in Section 1.1) and
Non-Program Vehicles that it will lease to ARAC for use in its daily vehicle
rental business pursuant to the Finance Lease, and AESOP Leasing desires to
obtain financing for such Vehicles from the Lender.
The Lender is willing to make Loans to AESOP Leasing on the
terms and conditions set forth herein.
The Lender will utilize the proceeds of one or more Series
of Notes issued from time to time pursuant to the Indenture to make Loans to
(i) AESOP Leasing hereunder, (ii) to AESOP Leasing under the AESOP I Operating
Lease Loan Agreement and (iii) to AESOP Leasing II under the AESOP II Loan
Agreement, in each case to the extent Vehicles eligible to be financed
hereunder and thereunder are available for financing and, in certain other
circumstances, to pay amortizing Notes. In addition, the Lender will utilize
the proceeds of certain capital contributions from time to time to make Loans
to AESOP Leasing hereunder to the extent Vehicles eligible to be financed
hereunder are available for financing and, in certain other circumstances, to
pay amortizing Notes. In connection with the foregoing, the Lender will assign
its rights hereunder and under the AESOP I Operating Lease Loan Agreement and
the AESOP II Loan Agreement to the Trustee to secure the Lender's obligations
to the Secured Parties.
The Loans made to AESOP Leasing hereunder will be secured by
all of AESOP Leasing's right, title and interest in and to (a) the Vehicles
leased under the
2
Finance Lease, (b) the Manufacturer Programs as they relate to such Vehicles
that are Program Vehicles, (c) all monies due arising from the sale of such
Vehicles that are Non-Program Vehicles, (c) all payments under insurance
policies or warranties relating to such Vehicles, (d) all payments due from
the Lessee and ARC under the Finance Lease and (e) all proceeds of the
foregoing.
Accordingly, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the terms and
conditions hereof, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
SECTION 1.1. Certain Definitions. As used in this Agreement
and unless the context requires a different meaning, capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in (i)
the Definitions List attached as Schedule I to the Base Indenture, dated as of
July 30, 1997 (as such agreement may be amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms, the "Base
Indenture"), between AFC-II and Xxxxxx Trust and Savings Bank, as trustee (the
"Trustee"), as in effect on the date hereof and as such Schedule I may be
amended or 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 Agreement, such determination or calculation
shall be made, to the extent applicable and except as otherwise specified in
this Agreement, in accordance with GAAP. When used herein, the term "financial
statement" shall include the notes and schedules thereto.
SECTION 1.3. Cross References; Headings. The words "hereof",
"herein" and "hereunder" and words of a similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Section, Schedule and Exhibit references
contained in this Agreement are refer-
3
ences to Sections, Schedules and Exhibits in or to this Agreement 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 Agreement are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement or any
provision hereof.
SECTION 1.4. Interpretation. In this Agree-
ment, unless the context otherwise requires:
(i) the singular includes the plural and
vice versa;
(ii) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors
and assigns are permitted by this Agreement, and reference to any
Person in a particular capacity only refers to such Person in such
capacity;
(iii) reference to any gender includes
the other gender;
(iv) 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;
(v) "including" (and with correlative meaning
"include") means including without limiting the generality of any
description preceding such term; and
(vi) with respect to the determination of any
period of time, "from" means "from and including" and "to" and
"until" means "to but excluding".
SECTION 2. LOAN COMMITMENT OF THE LENDER.
SECTION 2.1. Loan Commitment. Subject to the terms and
conditions of this Agreement, including Section 12.2, and further subject to
the availability of funds to the Lender pursuant to the Indenture, the Lender
agrees to make loans hereunder (the "Loans") to AESOP Leasing from time to
time on or after the Initial Closing Date
4
and prior to the Loan Commitment Termination Date; provided, that on any one
date the Loan Principal Amount of all Loans made hereunder to AESOP Leasing
shall not exceed the AESOP I Finance Lease Loan Agreement Borrowing Base. The
foregoing commitment of the Lender is called the "Loan Commitment".
SECTION 2.2. Certain Waivers. AESOP Leasing waives
presentment, demand for payment, notice of dishonor and protest, notice of the
creation of any of its Liabilities and all other notices whatsoever to AESOP
Leasing with respect to such Liabilities except notices required under Section
12.1. The obligations of AESOP Leasing under this Agreement and the Loan Note
shall not be affected by (i) the failure of the Trustee or the Lender or the
holder of the Loan Note or any of AESOP Leasing's Liabilities to assert any
claim or demand or to exercise or enforce any right, power or remedy against
AESOP Leasing or the AESOP I Finance Lease Loan Collateral or otherwise, (ii)
any extension or renewal for any period (whether or not longer than the
original period) or exchange of any of AESOP Leasing's Liabilities or the
release or compromise of any obligation of any nature of any Person with
respect thereto, (iii) the surrender, release or exchange of all or any part
of any property (including the AESOP I Finance Lease Loan Collateral) securing
payment and performance of any of AESOP Leasing's Liabilities or the
compromise or extension or renewal for any period (whether or not longer than
the original period) of any obligations of any nature of any Person with
respect to any such property, and (iv) any other act, matter or thing which
would or might, in the absence of this provision, operate to release,
discharge or otherwise prejudicially affect the obligations of AESOP Leasing.
SECTION 2.3. Conditions. The making of each Loan hereunder is
subject to the satisfaction of the applicable conditions set forth in Section
11.
SECTION 2.4. Use of Proceeds. AESOP Leasing shall apply the
funds received by it pursuant to Section 2.1 hereof solely to finance the
purchase of Eligible Vehicles that it will lease to ARAC pursuant to the
Finance Lease for use in ARAC's daily vehicle rental business.
5
SECTION 3. LOAN NOTE; LOAN PROCEDURE; RECORDKEEPING.
SECTION 3.1. Loan Note. The Loans made hereunder shall be
evidenced by a promissory note issued by AESOP Leasing (herein, as from time
to time supplemented, extended or replaced, the "Loan Note"), substantially in
the form set forth in Exhibit A, with appropriate insertions, dated as of the
Initial Closing Date, payable to the order of the Lender and assigned to the
Trustee pursuant to the Indenture.
SECTION 3.2. Loan Procedure. AESOP Leasing shall deliver a
Loan Request to the Lender no later than 4:00 p.m., New York City time, on a
day that is not less than one, nor more than five, Business Days prior to the
proposed Borrowing Date (which shall be a Business Day). Each Loan Request
shall be irrevocable, and shall specify (i) the principal amount of the
proposed Loan, (ii) the Borrowing Date of the proposed Loan, (iii) a summary
of the Vehicles being financed (including for Program Vehicles subject to the
GM Repurchase Program, the Designated Period for each such Program Vehicle),
(iv) whether each Vehicle is a Program Vehicle or a Non-Program Vehicle, (v)
the VIN for each Vehicle to be financed, (vi) in the case of new Vehicles, the
total Capitalized Cost thereof as of the Borrowing Date, and (vii) in the case
of Franchisee Vehicles, the Net Book Value of such Vehicles as of the first
day of the Related Month. The aggregate requested borrowings hereunder on any
Business Day shall be for an initial aggregate principal amount that, together
with the Loan Principal Amount of Loans outstanding hereunder and under the
AESOP I Operating Lease Loan Agreement and the AESOP II Loan Agreement on such
date, shall not exceed the principal amount of Notes outstanding on such date.
On the terms and subject to the conditions of this Agreement, on or before
2:00 p.m., New York City time, on the Borrowing Date specified in the Loan
Request, the Lender shall transfer same day or immediately available funds to
AESOP Leasing's account specified in such Loan Request in the amount specified
in such Loan Request. Each Loan Request made pursuant to this Section 3.2
shall constitute AESOP Leasing's representation and warranty that all of the
applicable conditions contained in Section 11 will, after giving effect to
such Loan, be satisfied.
6
SECTION 3.3. Recordkeeping. The Lender shall record in its
records, or at its option on the schedule attached to the Loan Note, the date
and principal amount of each Loan made hereunder, each repayment thereof, and
the other information provided for thereon. The aggregate unpaid Loan
Principal Amount so recorded shall be rebuttable presumptive evidence of the
Loan Principal Amount owing and unpaid on the Loan Note. The failure to so
record any such information or any error in so recording any such information
shall not, however, limit or otherwise affect the actual obligations of AESOP
Leasing hereunder or under the Loan Note to repay the Loan Principal Amount,
together with all Loan Interest accruing thereon.
SECTION 4. INTEREST.
SECTION 4.1. Interest Rate on Loans. AESOP Leasing hereby
promises to pay interest on the unpaid principal amount of each Loan made to
it hereunder (the "Loan Interest"), for each Loan Interest Period commencing
on the date such Loan is made to AESOP Leasing until such Loan is paid in full
at a rate not less than the Lender's Carrying Cost Interest Rate for the
applicable Loan Interest Period. The applicable rate of Loan Interest on each
Loan shall be specified in a Loan Request Response provided by the Lender to
AESOP Leasing on the date a Loan Request is delivered; provided that if the
Lender's Carrying Cost Interest Rate for the applicable Loan Interest Period
is higher than the rate of Loan Interest specified in the Loan Request
Response, Loan Interest payable shall be determined using the higher rate.
SECTION 4.2. Supplemental Interest. AESOP Leasing agrees to
pay to the Lender, as an additional interest payment, an amount equal to the
product of (A) the applicable Loan Agreement's Share as of the beginning of
each Loan Interest Period times (B) the sum of (i) the Supplemental Carrying
Charges for such Loan Interest Period, minus (ii) any accrued earnings on
Permitted Investments in the Collection Account which earnings are available
for distribution on the last Business Day of such Loan Interest Period (the
product of the amounts described in clauses (A) and (B) above, "Supplemental
Interest").
7
SECTION 4.3. Loan Interest Payment Dates. Accrued Loan
Interest on each Loan made hereunder shall be payable on each Payment Date
(with respect to the related Loan Interest Period), upon any prepayment and at
maturity, commencing with the first of such dates to occur after the date such
Loan is made. After maturity (whether by acceleration or otherwise), all
accrued Loan Interest and Supplemental Interest on all Loans made hereunder
shall be payable on demand. Supplemental Interest in respect of each Loan
Interest Period shall be payable on each Payment Date and upon any prepayment
and at maturity. All calculations of Loan Interest and Supplemental Interest
shall be based on a 360-day year and the actual number of days elapsed in the
related Loan Interest Period.
SECTION 4.4. Setting of Rates. The Lender's Carrying Cost
Interest Rate and Supplemental Carrying Charges used hereunder to compute Loan
Interest due on each Loan made hereunder on each Payment Date and the
Supplemental Interest due on each Payment Date shall be calculated from time
to time by the Lender in accordance with this Agreement (and written notice
thereof shall be provided to AESOP Leasing not later than ten days prior to
the applicable Payment Date). Such calculation shall be conclusive, absent
demonstrable error.
SECTION 4.5. Carrying Charges. AESOP Leasing agrees to pay
to the Lender on each Payment Date an amount equal to the product of (A) the
applicable Loan Agreement's Share as of such Payment Date times (B) all
accrued and unpaid Carrying Charges that are accrued and unpaid as of each
such Payment Date.
SECTION 5. REPAYMENT OF LOAN PRINCIPAL AMOUNT.
SECTION 5.1. Mandatory Repayment of Monthly Loan Principal
Amount of Loans. On each Payment Date, AESOP Leasing shall pay to the Lender,
as a repayment of the Loan Principal Amount, an amount equal to the product of
(A) the applicable Loan Payment Allocation Percentage as of the beginning of
the Related Month times (B) the sum, without duplication, of (i) the accrued
Depreciation Charges for the Related Month for all Vehicles (a) leased under
the Finance Lease as of the end of the Related Month or (b) described in
clauses (iii) or (iv) of this Section 5.1, plus (ii) all upfront incentive
payments
8
paid by Manufacturers during the Related Month in respect of purchases of
Non-Program Vehicles leased under the Finance Lease, plus (iii) the aggregate
Termination Values (each as of the date on which such Vehicle becomes an
Ineligible Vehicle, a Casualty or is sold, as applicable) of all the Vehicles
leased under the Finance Lease at any time during such Related Month that,
without double counting, while so leased either became Ineligible Vehicles,
suffered a Casualty or were sold by or on behalf of AESOP Leasing (it being
understood that AESOP Leasing has agreed to sell, or cause to be sold,
Vehicles only in a manner consistent with the provisions hereof and of the
Related Documents) to any Person other than to a Manufacturer pursuant to a
Manufacturer Program or to a third party pursuant to an auction conducted
through a Guaranteed Depreciation Program, in each case, during the Related
Month, plus (iv) the aggregate Termination Values (each as of the applicable
Turnback Date) of all Program Vehicles leased under the Finance Lease that
while so leased were returned to a Manufacturer pursuant to a Manufacturer
Program with respect to which either (x) the Repurchase Price has been paid by
such Manufacturer and/or the related auction dealers during the Related Month
or (y) a Manufacturer Event of Default has occurred, minus (v) an amount equal
to the sum of (1) any amounts received by the Lender or the Trustee, or
deposited into the Collection Account, during the Related Month representing
(a) Repurchase Prices for repurchases of Program Vehicles leased under the
Finance Lease at the applicable Turnback Date or (b) the sales proceeds
(including amounts paid by a Manufacturer as a result of the sale of a Program
Vehicle during the Related Month outside such Manufacturer's Manufacturer
Program but excluding amounts released to AESOP Leasing pursuant to the last
sentence of Section 5.2(a) of the Base Indenture) for sales of Vehicles leased
under the Finance Lease at the time of such sale to a third party other than
(x) to a Manufacturer pursuant to a Repurchase Program or (y) through an
auction dealer pursuant to a Guaranteed Depreciation Program and (2) any
amounts received in the Related Month and applied to the Loan Principal Amount
pursuant to Section 6.3 (the product of the amounts described in clauses (A)
and (B) above, the "Monthly Loan Principal Amount"). Unless otherwise required
to be paid sooner pursuant to the terms of this Agreement, the entire unpaid
Loan Principal Amount of the Loans made hereunder shall be payable on the last
occurring Series
9
Termination Date with respect to the Notes. All Loans made hereunder shall be
due on the maturity date therefor, whether by acceleration or otherwise.
Solely for determining the amounts payable under this Section 5.1, with
respect to a Program Vehicle that became a Casualty during the Related Month
as a result of such Program Vehicle being held beyond the stated expiration
date of the applicable Repurchase Period and not being redesignated as a
Non-Program Vehicle, such Vehicle will be deemed to have become a Casualty
upon such expiration date.
SECTION 5.2. Voluntary Prepayments of Loan Principal Amount.
AESOP Leasing may from time to time prepay the principal amount with respect
to any Loans made hereunder, in whole or in part, on any date; provided that,
except for any prepayment made pursuant to Section 6.3 hereof or any payment
made to comply with Section 10.13 hereof, AESOP Leasing shall give the Lender
and the Trustee not less than one (1) Business Day's prior notice of any such
prepayment, specifying the date and amount of such prepayment, and, if AESOP
Leasing is requesting a release of Vehicles from the Lien hereof pursuant to
Section 7.3, the Vehicles to which such prepayment relates.
SECTION 6. MAKING OF PAYMENTS.
SECTION 6.1. Making of Payments. All payments of the Monthly
Loan Principal Amount or Loan Interest hereunder, all prepayments of the Loan
Principal Amount hereunder, and all payments of Supplemental Interest,
Carrying Charges and of all other Liabilities shall be made by AESOP Leasing
to, or for the account of, the Lender in immediately available Dollars,
without setoff, counterclaim or deduction of any kind. All such payments shall
be made to the Collection Account (or such other account as the Lender may
from time to time specify with the consent of the Trustee), not later than
11:00 a.m., New York City time, on the date due, and funds received after that
hour shall be deemed to have been received by the Lender on the next following
Business Day. The Lender hereby specifies that all (i) payments with respect
to Program Vehicles leased under the Finance Lease made by the Manufacturers
and related auction dealers under the Manufacturer Programs, (ii) amounts
representing the proceeds from sales of Vehicles leased under the
10
Finance Lease (including amounts paid by a Manufacturer as a result of the
sale of such Vehicle outside such Manufacturer's Manufacturer Program) to
third parties (other than under any related Manufacturer Program) and (iii)
payments with respect to any other AESOP I Finance Lease Loan Collateral shall
be deposited in the Collection Account; provided, however, that, subject to
Section 5.2 of the Base Indenture, insurance proceeds and warranty payments
with respect to Vehicles leased under the Finance Lease will be deposited in
the Collection Account only if an Amortization Event or a Potential
Amortization Event shall have occurred and be continuing.
SECTION 6.2. Due Date Extension. If any (i) payment of the
Monthly Loan Principal Amount or Loan Interest hereunder or (ii) prepayments
of the Loan Principal Amount or Supplemental Interest with respect to any
Loans made hereunder 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 Loan
Interest or Supplemental Interest, as applicable, shall accrue through such
Business Day.
SECTION 6.3. Application of Sale Proceeds. AESOP Leasing
agrees that an amount equal to the product of (A) the applicable Loan Payment
Allocation Percentage as of the beginning of the Related Month times (B) the
sum of (i) all payments made by the Manufacturers and related auction dealers
under the Manufacturer Programs with respect to Vehicles leased under the
Finance Lease, plus (ii) proceeds from the sale of Vehicles leased under the
Finance Lease to third parties (other than to the Manufacturer or pursuant to
a Guaranteed Depreciation Program), in each case deposited in the Collection
Account on any date, shall be applied, upon receipt thereof in the Collection
Account, to prepay the Loan Principal Amount.
SECTION 6.4. Payment Deficits. At or before 11:30 a.m., New
York City time, on each Payment Date, AESOP Leasing shall notify the Trustee
and the related Enhancement Provider of the amount of the Lease Payment
Deficit, if any, with respect to each Series of Notes issued pursuant to the
Indenture, such notification to be in the form of Exhibit C.
11
SECTION 7. LOAN COLLATERAL SECURITY.
SECTION 7.1. Grant of Security Interest. (a) As security for
the prompt and complete payment and performance of its Liabilities, AESOP
Leasing hereby pledges, hypothecates, assigns, transfers and delivers to the
Lender, and hereby grants to the Lender, a continuing, security interest in,
all of the following, whether now owned or hereafter acquired:
(i) all Vehicles leased under the Finance
Lease, and all Certificates of Title with respect
thereto;
(ii) all right, title and interest of AESOP Leasing
in and to each Manufacturer Program, including any amendments
thereof, and all monies due and to become due under or in connection
with each such Manufacturer Program, in each case in respect of
Vehicles leased under the Finance Lease, whether payable as Vehicle
Repurchase Prices, auction sales proceeds, fees, expenses, costs,
indemnities, insurance recoveries, damages for breach of the
Manufacturer Programs or otherwise (but excluding all incentive
payments payable in respect of purchases of vehicles under the
Manufacturer Programs) and all rights to compel performance and
otherwise exercise remedies thereunder;
(iii) all right, title and interest of AESOP
Leasing in, to and under the Finance Lease, any agreement to sublease
Vehicles leased under the Finance Lease in accordance with Section 7
thereof, and the related Lessee Agreements (other than any right,
title and interest of AESOP Leasing with respect to any Excluded
Payments) including, without limitation, all monies due and to become
due to AESOP Leasing from any of the Lessees, any sublessee or the
Guarantor or any of their assigns under or in connection with the
Finance Lease, any such agreement to sublease and the related Lessee
Agreements, whether payable as principal, interest, rent, guaranty
payments (other than guaranty payments with respect to any Excluded
Payments provided to AESOP Leasing under the Finance Lease), fees,
expenses, costs, indemnities, insurance recoveries, damages for the
breach of any of the Finance Lease, any such
12
agreement to sublease and the related Lessee Agreements or otherwise,
and all rights, remedies, powers, privileges and claims of AESOP
Leasing against any other party under or with respect to the Finance
Lease, any such agreement to sublease and the related Lessee
Agreements (whether arising pursuant to the terms of the Finance
Lease, any such agreement to sublease or the related Lessee
Agreements or otherwise available to AESOP Leasing at law or in
equity), the right to enforce the Finance Lease, any such agreement
to sublease and the related Lessee Agreements as provided herein and
to give or withhold any and all consents, requests, notices,
directions, approvals, extensions or waivers under or with respect to
the Finance Lease, any such agreement to sublease and the related
Lessee Agreements or the obligations of any party thereunder, and all
collateral pledged by ARAC under the Finance Lease;
(iv) all right, title and interest of each of AESOP
Leasing in, to and under the Vehicle Title and Lienholder Nominee
Agreements, the HFS Indemnity and the Administration Agreement,
including any amendments thereof, and all monies due and to become
due thereunder, in each case in respect of Vehicles leased under the
AESOP I Finance Lease, whether payable as fees, expenses, costs,
indemnities, insurance recoveries, damages for the breach of any of
the Vehicle Title and Lienholder Nominee Agreements, the HFS
Indemnity and the Administration Agreement or otherwise and all
rights to compel performance and otherwise exercise remedies
thereunder;
(v) all payments under insurance policies (whether
or not the Lessor, the Lender or the Trustee is named as the loss
payee thereof) or any warranty payable by reason of loss or damage
to, or otherwise with respect to, any of the Vehicles leased under
the Finance Lease;
(vi) all right, title and interest of AESOP Leasing
in and to any proceeds from the sale of Vehicles leased under the
Finance Lease, including all monies due in respect of such Vehicles
under the Finance Lease, whether payable as the purchase price of
such Vehicles, auction sales proceeds, or as fees, expenses, costs,
indemnities, insurance
13
recoveries, or otherwise (including all upfront incentive payments
payable by Manufacturers in respect of purchases of Non-Program
Vehicles);
(vii) any assignment of a security interest in any
Vehicle leased under the Finance Lease granted to AESOP Leasing
pursuant to the Finance Lease or otherwise, and all Certificates of
Title with respect to each such Vehicle; and
(viii) all products and proceeds of all of
the foregoing;
provided, however, that the AESOP I Segregated Account shall not be subject to
the grant of a security interest by AESOP Leasing pursuant to this Section
7.1(a) and shall not constitute part of the AESOP I Loan Collateral.
(b) To secure the AFC-II Obligations, AESOP Leasing hereby
pledges, hypothecates, assigns, transfers and delivers to the Trustee, on
behalf of the Secured Parties, and hereby grants to the Trustee, on behalf of
the Secured Parties, a continuing, first priority security interest in, all of
the AESOP I Finance Lease Loan Collateral, whether now owned or hereafter
acquired. Upon the occurrence of a Liquidation Event of Default or a Limited
Liquidation Event of Default and subject to the provisions of the Related
Documents, the Trustee shall have all of the rights and remedies of a secured
party, including, without limitation, the rights and remedies granted under
the Uniform Commercial Code.
SECTION 7.2. Certificates of Title. AESOP Leasing shall
take, or shall cause to be taken, such action as shall be necessary to submit
all of the Certificates of Title for Vehicles leased under the Finance Lease
(other than Certificates of Title with respect to the (i) Initial Financed
Vehicles for which BONY is noted as the first lienholder and (ii) Franchisee
Vehicles for which the nominee lienholder under the applicable Franchisee
Nominee Agreement is noted as the first lienholder) to the appropriate state
authority for notation of the Trustee's lien thereon. The original
Certificates of Title shall be held by the Administrator, as agent for AESOP
Leasing, in trust for the benefit of the Lender and the Trustee.
14
SECTION 7.3. Release of AESOP I Finance Lease Loan
Collateral. The Lender shall request the Trustee in writing to release its
Lien on a Vehicle leased under the Finance Lease and the Certificate of Title
therefor upon the earliest of (i) in the case of a Program Vehicle or a
Non-Program 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 a Program Vehicle or a Non-Program Vehicle subject to a Repurchase
Program, the Turnback Date for such Vehicle, (ii) voluntary prepayment in full
of the principal amount of the Loan to which such Vehicle relates in
accordance with Section 5.2, as noted in records maintained by the Trustee,
(iii) receipt of proceeds from an ordinary course sale of such Vehicle in an
amount at least equal to the Termination Value of such Vehicle, provided,
however, that if such an ordinary course sale occurs during the Repurchase
Period with respect to a Program Vehicle, AESOP Leasing shall only sell or
permit a sale of such Program Vehicle for a purchase price, together with any
amounts payable by a Manufacturer as a result of or in connection with such
sale, equal to or greater than the Repurchase Price that it would have
received if it had turned back such Program Vehicle to the Manufacturer and
(iv) receipt of proceeds from an ordinary course sale of a Vehicle subject to
a Casualty in an amount at least equal to the Termination Value of such
Vehicle. With respect to Vehicles leased under the Finance Lease, from and
after the earliest of (a) in the case of a Program Vehicle or a Non-Program
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 a
Program Vehicle or a Non-Program Vehicle subject to a Repurchase Program, the
Turnback Date for such Vehicle, (b) a prepayment of the principal amount of
the Loan to which such Vehicle relates and (c) receipt of the purchase price
for a Vehicle by AESOP Leasing, or by the Trustee on the Lender's behalf, in
the case of (b) and (c), in an amount at least equal to the Termination Value
of such Vehicle, such Vehicle and such Certificate of Title shall be deemed to
be released from the Lien of this Agreement, and the Lender and the Trustee
shall execute such documents and instruments as AESOP Leasing may reasonably
request (including a power of attorney of the Trustee appointing the
Administrator to act as the agent of the Trustee in releasing the Lien of the
Trustee on Vehicles turned back or sold pursuant to the provi-
15
sions of this Section 7.3; which power of attorney shall be revocable by the
Lender or the Trustee at any time following the occurrence of a Liquidation
Event of Default), at AESOP Leasing's expense, to evidence and/or accomplish
such release.
SECTION 7.4. Change of Location or Name. So long as any of
its Liabilities shall remain outstanding or the Lender shall continue to have
any Loan Commitment, AESOP Leasing will not change (i) the location of its
principal place of business, chief executive office, major executive office,
chief place of business or its records concerning its business and financial
affairs, or (ii) its legal name or the name under or by which it conducts its
business, in each case without first giving the Trustee and the Lender at
least 30 days' advance written notice thereof and having taken any and all
action required to maintain and preserve the first priority perfected Lien
of the Lender or the Trustee on the AESOP I Finance Lease Loan Collateral
(except that the lien of the Trustee shall not be noted on the Certificates
of Title with respect to the Initial Financed Vehicles or the Franchisee
Vehicles), free and clear of any Lien whatsoever except for Permitted Liens;
provided, however, that notwithstanding the foregoing, AESOP Leasing shall
not change the location of its principal place of business, chief executive
office, major executive office, chief place of business or its records
concerning its business and financial affairs to any place outside the United
States of America.
SECTION 7.5. Deliveries; Further Assurances. AESOP Leasing
agrees that it will, at its sole expense, (i) immediately deliver or cause to
be delivered to the Lender (or the Trustee on behalf of the Secured Parties),
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 AESOP I Finance Lease Loan Collateral, other than the Certificates of
Title which shall be delivered to the Lender or the Trustee, as applicable,
after the occurrence of a Liquidation Event of Default, if such delivery is
reasonably necessary or appropriate to perfect or protect the Lender's (or the
Trustee's on behalf of the Secured Parties) security interest in such AESOP I
Finance Lease Loan Collateral, and (ii) execute and deliver, or cause to be
executed and delivered, to the Lender or the Trust-
16
ee 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 Lender or the Trustee), 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 Lender (or the Trustee) a valid perfected Lien on and
security interest in all of the AESOP I Finance Lease Loan Collateral now or
hereafter existing or acquired (free of all other Liens whatsoever other than
Permitted Liens) to secure payment and performance of its Liabilities.
SECTION 7.6. [RESERVED].
SECTION 7.7. [RESERVED].
SECTION 7.8. AESOP I Segregated Account. AESOP Leasing shall
establish and maintain in its name an account entitled "AESOP Leasing L.P.
Account" (the "AESOP I Segregated Account"). The AESOP I Segregated Account
shall be maintained (i) with a Qualified Institution, or (ii) as a segregated
trust account with the corporate trust department of a depository institution
or trust company having corporate trust powers and acting as trustee for funds
deposited in the AESOP I Segregated Account. If the AESOP I Segregated Account
is not maintained in accordance with the previous sentence, then within 10
Business Days after obtaining knowledge of such fact, AESOP Leasing shall
establish a new AESOP I Segregated Account which complies with such sentence
and transfer into the new AESOP I Segregated Account all amounts then on
deposit in the non-qualifying AESOP I Segregated Account. The parties hereto
acknowledge and agree that the monies held in the AESOP I Segregated Account
from time to time (i) are property of AESOP Leasing, (ii) are not being
pledged to secure any obligation to, or otherwise held in trust for, the
Lender or any of the persons specified in this Section 7.8 and (iii) are
available to satisfy the claims of creditors of AESOP Leasing generally;
provided, however, that if funds are deposited into the AESOP I Segregated
Account in accordance with Section 9.13 for the purpose of paying legal fees
and disbursements of counsel to AESOP Leasing or its Permitted Nominees, AESOP
Leasing shall use such funds
17
solely for such purpose; and provided further that nothing contained herein
shall affect the rights of the Lender to pursue all legal remedies available
to it with respect to any amounts payable by AESOP Leasing hereunder.
SECTION 8. REPRESENTATIONS AND WARRANTIES. To induce the
Lender to enter into this Agreement and to make Loans hereunder, AESOP Leasing
represents and warrants to the Lender as of the Initial Closing Date, as of
the date of each Loan made hereunder and as of each Series Closing Date that:
SECTION 8.1. Organization; Ownership; Power; Qualification.
AESOP Leasing is (i) a limited partnership duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation, (ii)
has the 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.
SECTION 8.2. Authorization; Enforceability. AESOP Leasing
has the power and has taken all necessary action to authorize it to execute,
deliver and perform this Agreement 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 Agreement
has been duly executed and delivered by AESOP Leasing and is, and each of the
other Related Documents to which AESOP Leasing is a party is, a legal, valid
and binding obligation of AESOP Leasing, enforceable in accordance with its
terms.
SECTION 8.3. Compliance. The execution, delivery and
performance by AESOP Leasing of this Agreement and each other Related Document
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, (ii) violate
any applicable law with respect to AESOP Leasing which violation could result
in a Material Adverse Effect, (iii) conflict with, result in a breach of, or
constitute a
18
default under the certificate of limited partnership or limited partnership
agreement of AESOP Leasing, or under any indenture, agreement, or other
instrument to which AESOP Leasing is a party or by which its properties may be
bound, 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 AESOP
Leasing except Permitted Liens.
SECTION 8.4. [RESERVED].
SECTION 8.5. Litigation. There is no action, suit or
proceeding pending against or, to the knowledge of AESOP Leasing, threatened
against or affecting AESOP Leasing before any court or arbitrator or any
Governmental Authority in which there is a reasonable possibility of an
adverse decision that could materially adversely affect the consolidated
financial position, consolidated results of operations, business, properties,
performance or condition (financial or otherwise) of AESOP Leasing or which in
any manner draws into question the validity or enforceability of this
Agreement or any other Related Document or the ability of AESOP Leasing to
comply with any of the respective terms hereunder or thereunder.
SECTION 8.6. Liens. The AESOP I Finance Lease Loan
Collateral is free and clear of all Liens other than (i) Permitted Liens and
(ii) Liens in favor of the Lender or the Trustee. The Lender (or the Trustee
on behalf of the Secured Parties) has obtained, as security for the
Liabilities, a first priority perfected Lien on all AESOP I Finance Lease Loan
Collateral. All Vehicle Perfection and Documentation Requirements with respect
to all Vehicles leased under the Finance Lease on or after the date hereof
have and will continue to be satisfied in accordance with the terms of this
Agreement.
SECTION 8.7. Employee Benefit Plans. AESOP Leasing has not
established and does not maintain or contribute to any employee benefit plan
that is covered by Title IV of ERISA, and will not do so, so long as the Loan
Commitment has not expired, or any amount is owing to the Lender hereunder.
SECTION 8.8. Investment Company Act. AESOP Leasing is not
and is not controlled by an "investment company," within the meaning of the
Investment Company
19
Act, and AESOP Leasing is not subject to any other statute which would impair
or restrict its ability to perform its obligations under this Agreement or the
other Related Documents, and neither the entering into or performance by AESOP
Leasing of this Agreement nor the issuance of the Loan Note violates any
provision of such Act.
SECTION 8.9. Regulations G, T, U and X. AESOP Leasing is not
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 and X of the Board of Governors of
the Federal Reserve System). None of AESOP Leasing, any Affiliate of AESOP
Leasing or any Person acting on its behalf has taken or will take action to
cause the execution, delivery or performance of this Agreement or the Loan
Note, the making or existence of the Loans or the use of proceeds of the Loans
made hereunder to violate Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System.
SECTION 8.10. Proceeds. The proceeds of the Loans made
hereunder will be used solely to finance the purchase of Eligible Vehicles
that will be leased under the Finance Lease.
SECTION 8.11. Business Locations; Trade Names. Schedule 8.11
lists each of the locations where AESOP Leasing maintains a chief executive
office, principal place of business, or any records, and Schedule 8.11 also
lists AESOP Leasing's legal name and each name under or by which AESOP Leasing
conducts its business.
SECTION 8.12. Taxes. AESOP Leasing has filed all tax returns
which have been required to be filed by it (except where the requirement to
file such return is subject to a valid extension), and has paid or provided
adequate reserves for the payment of all taxes shown due on such returns or
required to be paid as a condition to such extension, as well as all payroll
taxes and federal and state withholding taxes, and all assessments payable by
it that have become due, other than those that are payable without penalty or
are being contested in good faith by appropriate proceedings and with respect
to which adequate reserves have been established, and are being maintained, in
accordance with GAAP. As of the Initial Closing Date, to the best of AESOP
Leasing's
20
knowledge, there is no unresolved claim by a taxing authority concerning AESOP
Leasing'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 adequate reserves have been established, and are
being maintained, in accordance with GAAP.
SECTION 8.13. Governmental Authorizations. AESOP Leasing has
all licenses, franchises, permits and other governmental authorizations
necessary for all businesses presently carried on by it (including owning and
leasing the real and personal property owned and leased by it), except where
failure to obtain such licenses, franchises, permits and other governmental
authorizations would not have a material adverse effect on its business and
properties or a Material Adverse Effect (as set forth in clauses (ii) and
(iii) of the definition thereof).
SECTION 8.14. Compliance with Laws. AESOP Leasing: (i) is
not in violation of any law, ordinance, rule, regulation or order of any
Governmental Authority applicable to it or its property, which violation would
have a material adverse effect on its business and properties or a Material
Adverse Effect (as set forth in clauses (ii) and (iii) of the definition
thereof), and no such violation has been alleged, (ii) has filed in a timely
manner all reports, documents and other materials required to be filed by it
with any governmental bureau, agency or instrumentality (and the information
contained in each of such filings is true correct and complete in all material
respects), except where failure to make such filings would not have a material
adverse effect on its business and properties or a Material Adverse Effect (as
set forth in clauses (ii) and (iii) of the definition thereof) and (iii) has
retained all records and documents required to be retained by it pursuant to
any Requirement of Law, except where failure to retain such records would not
have a material adverse effect on its business and properties or a Material
Adverse Effect (as set forth in clauses (ii) and (iii) of the definition
thereof).
SECTION 8.15. Eligible Vehicles. Each Vehicle leased under
the Finance Lease was, on the date of financing thereof by AESOP Leasing, an
Eligible Vehicle.
21
SECTION 8.16. Manufacturer Programs. No Manufacturer Event
of Default has occurred and is continuing with respect to any Eligible Program
Manufacturer.
SECTION 8.17. Absence of Default. AESOP Leasing is in
compliance with all of the provisions of its certificate of limited
partnership and limited partnership agreement and no event has occurred or
failed to occur which has not been remedied or waived, the occurrence or
non-occurrence of which constitutes, or with the passage of time or giving of
notice or both would constitute, (i) an AESOP I Loan Event of Default or a
Potential AESOP I Loan Event of Default or (ii) a default or event of default
by AESOP Leasing under any indenture, agreement or other instrument, or any
judgment, decree or final order to which AESOP Leasing is a party or by which
AESOP Leasing or any of its properties may be bound or affected.
SECTION 8.18. No Security Interest; Title to Assets. (a) All
action necessary (including the filing of UCC-1 financing statements, the
assignment of rights under the Manufacturer Programs to the Trustee, the
notation on Certificates of Title for all Vehicles leased under the Finance
Lease (other than Certificates of Title with respect to the (i) Initial
Financed Vehicles for which BONY is noted as the first lienholder and (ii)
Franchisee Vehicles for which the nominee lienholder under the applicable
Franchisee Nominee Agreement is noted as the first lienholder) of the
Trustee's lien for the benefit of the Secured Parties) to protect and perfect
AFC-II's security interest in the AESOP I Finance Lease Loan Collateral and
the Trustee's security interest on behalf of the Noteholders in the Collateral
now in existence and hereafter acquired or created has been duly and
effectively taken.
(b) AESOP Leasing has good, legal and marketable title to,
or a valid leasehold interest in, all of its assets. None of such properties
or assets is subject to any Liens, except for Permitted Liens. Except for
financing statements or other filings with respect to or evidencing Permitted
Liens, no financing statement under the UCC of any state, application for a
Certificate of Title or certificate of ownership, or other filing which names
AESOP Leasing as debtor or which covers or purports to cover any of the assets
of AESOP Leasing is on file in
22
any state or other jurisdiction, and AESOP Leasing has not signed any such
financing statement, application or instrument authorizing any secured party
or creditor of such Person thereunder to file any such financing statement,
application or filing other than with respect to Permitted Liens.
SECTION 8.19. Accuracy of Information. All data,
certificates, reports, statements, opinions of counsel, documents and other
information furnished to the Lender or the Trustee by or on behalf of AESOP
Leasing 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, (i) be
complete and correct in all material respects to the extent necessary to give
the Lender or the Trustee, as the case may be, true and accurate knowledge of
the subject matter thereof, (ii) not contain any untrue statement of a
material fact and (iii) not omit to state a material fact necessary in order
to make the statements contained therein (in light of the circumstances in
which they were made) not misleading, and the furnishing of the same to the
Lender or the Trustee, as the case may be, shall constitute a representation
and warranty by AESOP Leasing made on the date the same are furnished to the
Lender or the Trustee, as the case may be, to the effect specified in clauses
(i), (ii) and (iii) above.
SECTION 9. AFFIRMATIVE COVENANTS. Until the expiration or
termination of the Loan Commitment and thereafter until the Loan Note and all
other Liabilities are paid in full, AESOP Leasing agrees that, unless at any
time the Lender shall otherwise expressly consent in writing:
SECTION 9.1. Existence; Foreign Qualification. AESOP Leasing
will do and cause to be done at all times all things necessary to (i) maintain
and preserve its existence as a limited partnership, (ii) be, and ensure that
it is, duly qualified to do business and in good standing as a foreign limited
partnership in each jurisdiction where the nature of its business makes such
qualification necessary and the failure to so qualify would have a material
adverse effect on its business and properties or a Material Adverse Effect (as
set forth in clauses (ii) and (iii) of the definition thereof) and
23
(iii) comply with all Contractual Obligations and Requirements of Law binding
upon it, except to the extent that the failure to comply therewith would not,
in the aggregate, have a material adverse effect on its business and
properties or a Material Adverse Effect (as set forth in clauses (ii) and
(iii) of the definition thereof).
SECTION 9.2. Books, Records and Inspections. AESOP Leasing
will (i) maintain complete and accurate books and records with respect to the
AESOP I Finance Lease Loan Collateral and (ii) permit any Person designated by
the Lender or the Trustee in writing to visit and inspect any of its
properties, corporate books and financial records and to discuss its affairs,
finances and accounts with its officers, its agents and its independent public
accountants, all at such reasonable times and as often as the Lender or the
Trustee may reasonably request.
SECTION 9.3. Insurance. AESOP Leasing will obtain and
maintain, or cause to be obtained and maintained, with respect to all Vehicles
leased under the Finance Lease (i) vehicle liability insurance to the full
extent required by law and in any event not less than $500,000 per Person and
$1,000,000 per occurrence, (ii) property damage insurance with a limit of
$1,000,000 per occurrence and (iii) excess coverage public liability insurance
with a limit of not less than $50,000,000 or the limit maintained from time to
time by the relevant Lessee at any time hereafter, whichever is greater, with
respect to all passenger cars and vans comprising such Lessee's rental fleet.
The Lender acknowledges and agrees that AESOP Leasing may, to the extent
permitted by applicable law, allow the relevant Lessees to self-insure with
respect to the Vehicles leased under the Finance Lease for the first
$1,000,000 per occurrence, or a greater amount up to a maximum of $3,000,000,
with the consent of each Enhancement Provider, per occurrence, of vehicle
liability and property damage insurance which is otherwise required to be
insured hereunder. All such policies shall be from financially sound and
reputable insurers, shall name the Lender, Original AESOP, PVHC, Quartx and
the Trustee as additional insured parties and, in the case of catastrophic
physical damage insurance on such Vehicles, shall name the Trustee as loss
payee as its interest may appear and will provide that the Lender and the
Trustee shall receive at least 10 days' prior
24
written notice of cancellation of such policies. AESOP Leasing will notify
promptly the Lender and the Trustee of any curtailment or cancellation of any
such Lessee's right to self-insure in any jurisdiction.
SECTION 9.4. Manufacturer Programs. AESOP Leasing will turn
in, or cause to be turned in, the Vehicles leased under the Finance Lease
which are Program Vehicles (subject to the redesignation provisions of Section
2.7 of the Finance Lease) to the relevant Manufacturer within the Repurchase
Period therefor (unless AESOP Leasing pays in full the Loan with respect to a
Program Vehicle pursuant to Section 5.2 or sells a Program Vehicle and, prior
to the end of the Repurchase Period therefor, receives sales proceeds thereof
in cash in an amount equal to or greater than the repurchase price under such
Manufacturer Program); and will comply with all of its obligations under each
Manufacturer Program.
SECTION 9.5. Reporting Requirements. AESOP Leasing will
furnish, or cause to be furnished, to the Lender and the Trustee and, in the
case of item (iii) below, each Rating Agency:
(i) Reports. All reports of ARC and the Lessee
required to be delivered to AESOP Leasing pursuant to Section 31.5
of the Finance Lease;
(ii) AESOP I Loan Events of Default; Amortization
Events. As soon as possible but in any event within two Business Days
after the occurrence of (A) any Potential AESOP I Loan Event of
Default or AESOP I Loan Event of Default, a written statement of an
Authorized Officer describing such event and the action that AESOP
Leasing proposes to take with respect thereto and (B) any Potential
Amortization Event or Amortization Event, notice thereof to the
Lender, each Enhancement Provider and the Rating Agencies;
(iii) Manufacturers. Promptly after obtaining
actual knowledge thereof, notice of any Manufacturer Event of Default
or termination or replacement of a Manufacturer Program;
25
(iv) Notice of Liens and Vicarious Liability
Claims. On each Determination Date, AESOP Leasing shall forward to
AFC-II, the Trustee and the Paying Agent, the Administrative Agent,
the Rating Agencies and each Enhancement Provider, (A) an Officer's
Certificate of AESOP Leasing certifying as to whether, to the
knowledge of AESOP Leasing, (x) any Lien exists on any of the AESOP I
Finance Lease Loan Collateral or (y) any vicarious liability claims
shall have been made against AESOP Leasing as a result of its
ownership of the Vehicles leased under the Finance Lease and (B) a
written statement of an Authorized Officer summarizing each such Lien
or claim and the action that AESOP Leasing proposes to take with
respect thereto; and
(v) Other. Promptly, from time to time, such other
information, documents, or reports respecting the AESOP I Loan
Collateral or the condition or operations, financial or otherwise, of
AESOP Leasing as the Lender or the Trustee may from time to time
reasonably request in order to protect the interests of the Lender or
the Trustee under or as contemplated by this Agreement or any other
Related Document.
SECTION 9.6. Payment of Taxes; Removal of Liens. AESOP
Leasing will pay when due all taxes, assessments, fees and governmental
charges of any kind whatsoever that may be at any time lawfully assessed or
levied against or with respect to AESOP Leasing or its property and assets or
any interest thereon. Notwithstanding the previous sentence, but subject in
any case to the other requirements hereof and of the Related Documents, AESOP
Leasing shall not be required to pay any tax, charge, assessment or imposition
nor to comply with any law, ordinance, rule, order, regulation or requirement
so long as AESOP Leasing shall contest, in good faith, the amount or validity
thereof, in an appropriate manner or by appropriate proceedings. Each such
contest shall be promptly prosecuted to final conclusion (subject to the right
of AESOP Leasing to settle any such contest).
SECTION 9.7. Business. AESOP Leasing will engage only in
businesses conducted on the date hereof.
26
SECTION 9.8. Maintenance of the Vehicles. AESOP Leasing will
maintain or cause to be maintained in good repair, working order, and
condition all of the Vehicles leased under the Finance Lease, except to the
extent that any such failure to comply with such requirements does not, in the
aggregate, materially adversely affect the interests of the Lender under this
Agreement or the interests of the Secured Parties under the Indenture or the
likelihood of repayment of the Loans made hereunder. From time to time AESOP
Leasing will make or cause to be made all appropriate repairs, renewals, and
replacements with respect to the Vehicles leased under the Finance Lease.
SECTION 9.9. Maintenance of Separate Existence. AESOP
Leasing will do all things necessary to continue to be readily distinguishable
from ARC, ARAC, Original AESOP, AESOP Leasing II, AFC, AFC-II, the Affiliates
of the foregoing or any other affiliated or unaffiliated entity and to
maintain its existence as a limited partnership separate and apart from that
of Original AESOP, AESOP Leasing II, AFC, AFC-II, ARAC and ARC and Affiliates
of ARC including, without limitation, (i) practicing and adhering to
organizational formalities, such as maintaining appropriate books and records;
(ii) observing all organizational formalities in connection with all dealings
between itself and ARC, ARAC, AESOP Leasing II, Original AESOP, AFC, AFC-II,
the Affiliates of the foregoing or any other affiliated or unaffiliated
entity; (iii) observing all procedures required by its certificate of limited
partnership, its limited partnership agreement and the laws of the State of
Delaware; (iv) acting solely in its name and through its duly authorized
officers or agents in the conduct of its businesses; (v) managing its business
and affairs by or under the direction of its general partner; (vi) ensuring
that its general partner duly authorizes all of its actions; (vii) ensuring
the receipt of proper authorization, when necessary, from its limited
partner(s) for its actions; (viii) requiring its general partner to maintain
at least two corporate directors who are Independent Directors; (ix) owning or
leasing (including through shared arrangements with Affiliates) all office
furniture and equipment necessary to operate its business; (x) not (A) having
or incurring any debt or obligations to any of AESOP Leasing II, Original
AESOP, AFC, AFC-II, ARC, ARAC, the Affiliates of the foregoing or any other
affiliated
27
or unaffiliated entity, except for, the obligations to AFC-II under the AESOP
I Loan Agreements; (B) other than as provided in the Related Documents,
guaranteeing or otherwise becoming liable for any obligations of AESOP Leasing
II, Original AESOP, AFC, AFC-II, ARAC or ARC or any Affiliates of the
foregoing; (C) having obligations guaranteed by AESOP Leasing II, Original
AESOP, AFC, AFC-II, ARAC or ARC or any Affiliates of the foregoing; (D)
holding itself out as responsible for debts of AESOP Leasing II, Original
AESOP, AFC, AFC-II, ARAC or ARC or any Affiliates of the foregoing or for
decisions or actions with respect to the affairs of AESOP Leasing II, Original
AESOP, AFC, AFC-II, ARAC or ARC or any Affiliates of the foregoing; (E)
failing to correct any known misrepresentation with respect to the statement
in subsection (C); (F) operating or purporting to operate as an integrated,
single economic unit with respect to AESOP Leasing II, Original AESOP, AFC,
AFC-II, ARAC, ARC, the Affiliates of the foregoing or any other affiliated or
unaffiliated entity or any other affiliated or unaffiliated entity; (G)
seeking to obtain credit or incur any obligation to any third party based upon
the assets of AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC, ARC, the
Affiliates of the foregoing or any other affiliated or unaffiliated entity;
(H) induce any such third party to reasonably rely on the creditworthiness of
AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC, ARC, the Affiliates of
the foregoing or any other affiliated or unaffiliated entity; and (I) being
directly or indirectly named as a direct or contingent beneficiary or loss
payee on any insurance policy of AESOP Leasing II, Original AESOP, AFC,
AFC-II, ARAC or ARC or any Affiliates of the foregoing other than as required
by the Related Documents with respect to insurance on the Vehicles; (xi) other
than as provided in the Related Documents, maintaining its deposit and other
bank accounts and all of its assets separate from those of any other Person;
(xii) maintaining its financial records separate and apart from those of any
other Person; (xiii) disclosing in its annual financial statements the effects
of the transactions contemplated by the Related Documents in accordance with
generally accepted accounting principles; (xiv) setting forth clearly in its
financial statements its separate assets and liabilities and the fact that the
Vehicles leased under the AESOP I Operating Lease are owned by AESOP Leasing;
(xv) not suggesting in any way, within its financial statements, that its
assets are available to
28
pay the claims of creditors of AESOP Leasing II, Original AESOP, AFC, AFC-II,
ARAC, ARC, the Affiliates of the foregoing or any other affiliated or
unaffiliated entity; (xvi) compensating all its employees, officers,
consultants and agents for services provided to it by such Persons out of its
own funds; (xvii) maintaining office space separate and apart from that of
AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC or ARC or any Affiliates
of the foregoing (even if such office space is subleased from or is on or near
premises occupied by AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC or
ARC or any Affiliates of the foregoing) and a telephone number separate and
apart from that of AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC or ARC
or any Affiliates of the foregoing; (xviii) conducting all oral and written
communications, including, without limitation, letters, invoices, purchase
orders, contracts, statements, and applications solely in its own name; (xix)
having separate stationary from AESOP Leasing II, Original AESOP, AFC, AFC-II,
ARAC, ARC, the Affiliates of the foregoing or any other affiliated or
unaffiliated entity; (xx) accounting for and managing all of its liabilities
separately from those of AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC
or ARC or any Affiliates of the foregoing; (xxi) allocating, on an
arm's-length basis, all shared operating services, leases and expenses,
including, without limitation, those associated with the services of shared
consultants and agents and shared computer and other office equipment and
software; and otherwise maintaining an arm's-length relationship with each of
AESOP Leasing II, Original AESOP, AFC, AFC-II, ARAC, ARC, the Affiliates of
the foregoing or any other affiliated or unaffiliated entity; (xxii)
refraining from filing or otherwise initiating or supporting the filing of a
motion in any bankruptcy or other insolvency proceeding involving AESOP
Leasing II, Original AESOP, AFC, AFC-II, AESOP Leasing, ARAC, ARC or any
Affiliate of ARC, to substantively consolidate AESOP Leasing II, Original
AESOP, AFC, AFC-II or AESOP Leasing with ARAC, ARC or any Affiliate of ARC;
(xxiii) remaining solvent and assuring adequate capitalization for the
business in which it is engaged and (xxiv) conducting all of its business
(whether written or oral) solely in its own name so as not to mislead others
as to the identity of each of AESOP Leasing II, Original AESOP, AESOP Leasing,
AFC, AFC-II, ARAC, ARC and the Affiliates of the foregoing or any other
affiliated or unaffiliated entity. AESOP Leasing ac-
29
knowledges its receipt of a copy of those certain opinion letters issued by
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP dated July 30, 1997 addressing the
issue of substantive consolidation as they may relate to any of ARAC, ARC and
each affiliate of ARC on the one hand and any of AESOP Leasing II, Original
AESOP, AFC, AFC-II and AESOP Leasing on the other hand and as among AESOP
Leasing II, Original AESOP, AESOP Leasing, AFC-II and AFC. AESOP Leasing
hereby agrees to maintain in place all policies and procedures, and take and
continue to take all action, described in the factual assumptions set forth in
such opinion letter and relating to it.
SECTION 9.10. Manufacturer Payments; Sales Proceeds. AESOP
Leasing will cause each Manufacturer and auction dealer to make all payments
under the Manufacturer Programs with respect to Program Vehicles directly to
the Collection Account. Any such payments from Manufacturers or related
auction dealers received directly by AESOP Leasing, will be, within three
Business Days of receipt, deposited into the Collection Account. AESOP Leasing
shall, within two Business Days of receipt thereof, deposit into the
Collection Account all amounts representing the proceeds from sales of Program
Vehicles by auction dealers under a Guaranteed Depreciation Program and sales
of Vehicles (including amounts paid by a Manufacturer as a result of the sale
of such Vehicle outside such Manufacturer's Manufacturer Program) to third
parties (other than under any related Manufacturer Program) and all payments
with respect to other AESOP I Loan Collateral (other than the AESOP I Loan
Collateral described in the last sentence of this paragraph). Insurance
proceeds and warranty payments with respect to Vehicles will only be deposited
into the Collection Account if an Amortization Event or Potential Amortization
Event shall have occurred and be continuing.
SECTION 9.11. Maintenance of Properties. AESOP Leasing will
maintain or cause to be maintained 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 (whether owned or held under lease), 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
30
adverse effect on its business and properties or a Material Adverse Effect (as
set forth in clauses (ii) and (iii) of the definition thereof) could result,
and maintain good, legal and marketable title to, or a valid leasehold
interest in, all of its assets, free and clear of all Liens except for
Permitted Liens, and except to the extent sold or otherwise disposed of in
accordance with this Agreement or any other Related Document.
SECTION 9.12. Verification of Title. AESOP Leasing will, on
an annual basis, cause a title check to be performed by an independent
nationally recognized firm of certified public accountants acceptable to the
Trustee and each Enhancement Provider on a statistical sample of all Vehicles
leased under the Leases designed to provide a ninety-five percent (95%)
confidence level that no more than five percent (5%) of the Certificates of
Title for such Vehicles did not correctly reference the Trustee or its
Permitted Nominee, as first lienholder, and the Lessor of such Vehicle or its
Permitted Nominee or, in the case of Financed Vehicles, ARAC or its Permitted
Nominee, as owner, and cause such party to deliver a report stating that,
within the confidence level set forth above, no more than five percent (5%) of
the Certificates of Title did not correctly reference the lienholder or
owner of the Vehicles described in the immediately preceding clause.
SECTION 9.13. Legal Reserve Fund. On and after the Legal
Reserve Funding Date and for so long as the Legal Reserve Release Condition is
not met, AESOP Leasing shall maintain a balance of $500,000 in the AESOP I
Segregated Account for the purpose of paying legal fees and disbursements of
counsel to AESOP Leasing or its Permitted Nominees for the defense of
vicarious liability claims.
SECTION 9.14. Delivery of Information. AESOP Leasing will
provide to the Lender any information or materials necessary for the Lender to
comply with its obligations under the Indenture.
SECTION 9.15. [RESERVED].
SECTION 9.16. Vehicles. AESOP Leasing will cause ARAC to
maintain good and marketable title to each Vehicle financed by AESOP Leasing
with the proceeds of
31
Loans made hereunder and leased under the Finance Lease, free and clear of all
Liens and encumbrances, other than any Permitted Liens.
SECTION 9.17. Assignments. AESOP Leasing will deliver to the
Trustee on or prior to the Initial Closing Date, or such later date and
thereafter, as necessary to comply with the terms of the Related Documents,
executed counterparts of the Assignment Agreements related to the assignment
of rights under each Manufacturer Program, dated as of the Initial Closing
Date, or such later date, if delivered after the Initial Closing Date in
accordance herewith, duly executed by ARAC, each other Lessee, AESOP Leasing,
AESOP Leasing II, AFC-II, the Trustee and each applicable Manufacturer.
SECTION 9.18. Notation of Liens. AESOP Leasing will deliver
to the Lender and the Trustee on or prior to the Initial Closing Date and on
an ongoing basis, as applicable, evidence (which, in the case of the filing of
financing statements on form UCC-1, may be telephonic confirmation of such
filing, followed by prompt written confirmation) that it has caused or is
causing the Trustee's name to be noted on the Certificate of Title for each
Vehicle leased under the Finance Lease (other than Certificates of Title with
respect to the (i) Initial Financed Vehicles for which BONY is noted as the
first lienholder and (ii) Franchisee Vehicles for which the nominee lienholder
under the applicable Franchisee Nominee Agreement is noted as the first
lienholder) in accordance herewith and all filings (including filings of
financing statements on form UCC-1) and recordings have been accomplished as
may be required by law to establish, perfect, protect and preserve the rights,
titles, interests, remedies, powers, privileges, licenses and security
interest of the Trustee in such Vehicles and other AESOP I Finance Lease Loan
Collateral for the benefit of the Secured Parties.
SECTION 9.19. [RESERVED].
SECTION 9.20. [RESERVED].
SECTION 9.21. [RESERVED].
SECTION 9.22. Non-Program Vehicle Report. On or before the
second Determination Date immediately
32
following June 30 and December 31 of each calendar year, beginning with
December 31, 1997, AESOP Leasing shall cause a firm of nationally recognized
independent public accountants (who may also render other services to AESOP
Leasing, ARC or ARAC and who is acceptable to the Rating Agencies and each
Enhancement Provider) to furnish a report to the Lender, the Trustee, each
Enhancement Provider and the Rating Agencies to the effect that they have
performed certain agreed upon procedures (which shall be acceptable to each
Enhancement Provider) with respect to the calculation of the (i) Disposition
Proceeds obtained from the sale or other disposition of all Non-Program
Vehicles (other than Casualties) sold or otherwise disposed of during each
Related Month in such period (ii) Non-Program Fleet Market Value and compared
such calculations with the corresponding amounts set forth in the Monthly
Certificate prepared pursuant to Section 4.1(b) of the Indenture and that on
the basis of such comparison such accountants are of the opinion that such
amounts are in agreement, except for such exceptions as they believe to be
material and such other exceptions as shall be set forth in such report. On or
before the second Determination Date immediately following March 31 and
September 30 of each calendar year, beginning with September 30, 1997, AESOP
Leasing shall furnish an Officer's Certificate of AESOP Leasing to the Lender,
the Trustee, each Enhancement Provider and the Rating Agencies to the effect
that the officer making such certification has compared or caused to be
compared the calculations described in clauses (i) and (ii) above with the
corresponding amounts set forth in the Monthly Certificate prepared pursuant
to Section 4.1(b) of the Indenture and that on the basis of such comparison
such officer is of the opinion that such amounts are in agreement, except for
such exceptions as shall be set forth in such Officer's Certificate.
SECTION 9.23. Sale of Non-Program Vehicles Returned to AESOP
Leasing. In the event that any Non-Program Vehicle leased under the Finance
Lease is returned to AESOP Leasing in accordance with Section 2.6(c) of the
Finance Lease, AESOP Leasing shall use commercially reasonable efforts to
arrange for the sale of such Vehicle and to maximize the sale price thereof.
AESOP Leasing shall not return a Non-Program Vehicle to a Manufacturer under a
Manufacturer Program unless the conditions set forth in Section 2.6(b) of the
Finance
33
Lease would have been satisfied with respect to such disposition.
SECTION 10. NEGATIVE COVENANTS. Until the expiration or
termination of the Loan Commitment and thereafter until the Loan Note and all
other Liabilities are paid in full, AESOP Leasing agrees that, unless at any
time the Lender shall otherwise expressly consent in writing, it will not:
SECTION 10.1. Liens. Create, incur, assume or permit to
exist any Lien upon any of its Assets (including the AESOP I Collateral),
other than Permitted Liens.
SECTION 10.2. Other Indebtedness. Create, assume, incur,
suffer to exist or otherwise become or remain liable in respect of any
Indebtedness other than (i) Indebtedness hereunder and (ii) Indebtedness
permitted under any other Related Document.
SECTION 10.3. Mergers, Consolidations. Except as may be
permitted by the express written approval of the Trustee and the Lender, merge
with or into, enter into any joint venture or other association with, or
consolidate with, any other Person.
SECTION 10.4. Sales of Assets. Sell, lease, transfer,
liquidate or otherwise dispose of any Assets, except as contemplated by the
Related Documents.
SECTION 10.5. Acquisition of Assets. Acquire, by long-term
or operating lease or otherwise, any Assets except pursuant to the terms of
the Related Documents.
SECTION 10.6. Dividends, Officers' Compensation, etc. (i)
Declare or pay any distributions on any of its partnership interests or make
any other distribution on, or any purchase, redemption or other acquisition
of, any of its partnership interests except out of funds in the AESOP I
Segregated Account, or (ii) pay any wages or salaries or other compensation to
officers, employees or others except out of earnings computed in accordance
with GAAP and, in any case, only from funds in the AESOP I Segregated Account.
SECTION 10.7. Organizational Documents. Amend any of its
organizational documents, including its cer-
34
tificate of limited partnership or limited partnership agreement, unless prior
to such amendment, each Rating Agency confirms that after such amendment the
Rating Agency Consent Condition and the CP Rating Agency Condition will be
met.
SECTION 10.8. Investments. Make, incur, or suffer to exist
any loan, advance, extension of credit or other investment in any Person other
than pursuant to the Related Documents.
SECTION 10.9. Regulations G, T, U and X. Use or permit any
proceeds of the Loans made hereunder 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 10.10. Other Agreements. Enter into any agreement
containing any provision which would be violated or breached by the
performance of its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection herewith.
SECTION 10.11. Use of Vehicles. Use or allow the Vehicles
leased under the Finance Lease to be used in any manner (i) that would make
Program Vehicles ineligible for repurchase under an Eligible Manufacturer
Program, (ii) for any illegal purposes or (iii) that could subject the
Vehicles to confiscation.
SECTION 10.12. Use of Proceeds. Use the proceeds of the
Loans made hereunder for any purpose other than to finance the purchase of
Eligible Vehicles that will be leased under the Finance Lease.
SECTION 10.13. Limitations on the Acquisition or
Redesignation of Certain Vehicles. Unless otherwise specified in the related
Supplement or unless waived by the Required Noteholders as specified in the
related Supplement, permit (a) the Non-Eligible Manufacturer Amount as of any
Payment Date to exceed any applicable Maximum Non-Eligible Manufacturer
Amount, (b) the Financed Vehicle Amount as of any Payment Date to exceed any
applicable Maximum Financed Vehicle Amount, (c) the
35
Non-Program Vehicle Amount as of any Payment Date to exceed any applicable
Maximum Non-Program Vehicle Amount and (d) the aggregate Net Book Value of all
Vehicles leased under the Leases and manufactured by a particular Manufacturer
or group of Manufacturers as of any Payment Date to exceed any applicable
Maximum Manufacturer Amount.
SECTION 10.14. Maximum Vehicle Age. Permit at any time the
age of any Non-Program Vehicle leased under the Finance Lease, calculated from
the date of the original manufacturer invoice for such Vehicle, to exceed 18
months.
SECTION 11. CONDITIONS.
SECTION 11.1. Initial Loans. The effectiveness of this
Agreement and the obligation of the Lender to make the initial Loans hereunder
to AESOP Leasing shall be subject to the prior or concurrent (i) delivery of
each of the following documents to the Lender and, if not otherwise required
to be delivered to the Trustee by any other Related Document, to the Trustee
and any Enhancement Provider, as applicable (in form and substance
satisfactory to the Lender and, if applicable, the Trustee and any Enhancement
Provider) and (ii) satisfaction of the following conditions, as applicable:
(a) Loan Note. A Loan Note duly executed by AESOP Leasing;
(b) Certificate of Limited Partnership; Certificate of
Incorporation. The certificate of limited partnership of AESOP Leasing, duly
certified by the Secretary of State of the State of Delaware, together with a
copy of the limited partnership agreement of AESOP Leasing, duly certified by
the Secretary or an Assistant Secretary of Original AESOP. The certificate of
incorporation of Original AESOP, duly certified by the Secretary of State of
the State of Delaware, together with a copy of the by-laws of Original AESOP,
duly certified by the Secretary or an Assistant Secretary of Original AESOP;
(c) Resolutions. Copies of resolutions of the Board of
Directors of Original AESOP, the general partner of AESOP Leasing, authorizing
or ratifying the execution, delivery and performance of those documents and
matters
36
required of it with respect to this Agreement, duly certified by the Secretary
or an Assistant Secretary of Original AESOP;
(d) Consents, etc. Certified copies of all documents
evidencing any necessary limited partnership action, consents and governmental
approvals (if any) with respect to this Agreement;
(e) Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of Original AESOP certifying the names of
the individual or individuals authorized to sign this Agreement and the other
Related Documents to be executed by it, together with a sample of the true
signature of each such individual (the Lender may conclusively rely on each
such certificate until formally advised by a like certificate of any changes
therein);
(f) Opinions of Counsel. The opinions of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, special counsel to AESOP Leasing, AESOP Leasing II,
AFC and AFC-II, addressed to the Lender, the Trustee, the Placement Agents,
the Rating Agencies and the Administrative Agent, on behalf of the Liquidity
Lenders, the opinions of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for
ARC and ARAC addressed to the Lender, the Trustee, the Placement Agents, the
Rating Agencies and the Administrative Agent, on behalf of the Liquidity
Lenders, and the opinions of counsel to each applicable Manufacturer for the
Manufacturer Programs under which Program Vehicles will be financed hereunder
addressed to the Lender, the Trustee, the Rating Agencies and the
Administrative Agent, on behalf of the Liquidity Lenders;
(g) Good Standing Certificates. Certificates of good
standing for AESOP Leasing in the jurisdiction of its formation and the
jurisdiction of its principal place of business;
(h) Search Reports. A written search report from a Person
satisfactory to the Lender and the Trustee listing all effective financing
statements that name AESOP Leasing, as debtor or assignor, and that are filed
and the jurisdictions in which filings were made pursuant to subsection (i)
below, together with copies of such financing statements, and tax and judgment
lien search
37
reports from a Person satisfactory to the Lender and the Trustee showing no
evidence of such liens filed against AESOP Leasing;
(i) Evidence. Evidence (which may be telephonic, followed by
prompt written confirmation) of the filing of proper financing statements on
Form UCC-1, naming AESOP Leasing as debtor, the Lender as secured party and
the Trustee as assignee or other, similar instruments or documents, as may be
necessary or, in the reasonable opinion of the Lender and the Trustee,
desirable under the UCC of all applicable jurisdictions to perfect the
Lender's and the Trustee's interest in the AESOP I Loan Collateral;
(j) Enhancement Agreement. An executed copy of the
Enhancement Agreement pursuant to the Supplement with respect to any Series of
Notes for which the Series Closing Date occurs on the Initial Closing Date;
(k) Enhancement. The Enhancement Amount with respect to any
Series of Notes for which the Series Closing Date occurs on the Initial
Closing Date is equal to or exceeds the Required Enhancement Amount for such
Series;
(l) Leases. An executed copy of each of the Leases and all
documents required to be delivered by any relevant Lessee and ARC to the
Lessors pursuant to the Leases, and all conditions to the effectiveness of the
Leases shall have been satisfied;
(m) Assignment Agreement. An executed copy of the Assignment
Agreement of each Manufacturer;
(n) Certified Copy of Manufacturer Program. A copy of each
Manufacturer Program under which Program Vehicles will be financed hereunder
and an Officer's Certificate, dated the Initial Closing Date, and duly
executed by an Authorized Officer of Original AESOP, certifying that each such
copy is true, correct and complete as of the Initial Closing Date and that
each such Manufacturer Program shall be in full force and effect and
enforceable against the related Manufacturer;
(o) Indenture. The Indenture, dated the Initial Closing
Date, duly executed by the Lender and the
38
Trustee, and all conditions to the effectiveness thereof and the issuance of
the Notes thereunder shall have been satisfied in all respects;
(p) Vehicle Title and Lienholder Nominee Agreements and HFS
Indemnity. The Vehicle Title and Lienholder Nominee Agreements and the HFS
Indemnity, each dated the Initial Closing Date, duly executed by the parties
thereto;
(q) Conditions Precedent to Note Issuance. All conditions
precedent to the issuance of any Series of Notes for which the Series Closing
Date occurs on the Initial Closing Date shall have been satisfied in accor-
dance with the related Supplement; and
(r) Other. Such other documents as the Trustee or the
Lender may reasonably request.
SECTION 11.2. All Loans. All Loans hereunder (including the
initial Loan) shall be subject to the further conditions precedent that (a) if
the amount of Enhancement with respect to any Series of Notes is increased or
if the current Enhancement with respect to any Series of Notes is replaced, to
the extent such additional or replacement Enhancement is in the form of an un-
funded commitment (including, without limitation, a letter of credit), AESOP
Leasing shall cause the delivery to the Lender, the Trustee, the Enhancement
Providers, if any, for any Series of Notes issued and outstanding on the date
of such opinion(s), Placement Agents, if any, the Rating Agencies and the
Administrative Agent (on behalf of the Liquidity Lenders) on or prior to the
effectiveness of such additional or replacement Enhancement of opinion(s) of
counsel as to the enforceability of such additional or replacement Enhancement
substantially similar to the original opinions delivered with respect to such
Enhancement, (b) the Lender shall have received a completed Loan Request
therefor and a copy of the related Vehicle Order, (c) all conditions precedent
to the issuance of any Series of Notes after the Initial Closing Date shall
have been satisfied in accordance with the related Supplement and (d) on the
date of such Loan the following statements shall be true (and AESOP Leasing,
by accepting the amount of such Loan, shall be deemed to have represented and
warranted that): (i) the representations and warranties contained in Section 8
are true and
39
correct on and as of such date with the same effect as though made on and as
of such date and shall be deemed to have made on such date and (ii) no
Potential AESOP I Finance Lease Loan Event of Default or AESOP I Finance Lease
Loan Event of Default has occurred and is continuing or would result from the
making of such Loan or from the application of the proceeds of such Loan.
SECTION 12. LOAN EVENTS OF DEFAULT AND THEIR EFFECT.
SECTION 12.1. AESOP I Finance Lease Loan Events of Default.
Each of the following shall constitute an AESOP I Finance Lease Loan Event of
Default under this Agreement:
12.1.1. Non-Payment of Loans. Default in
the payment when due of the principal amount of any Loan made hereunder or the
Monthly Loan Principal Amount hereunder, and the continuance thereof for one
(1) Business Day after the occurrence thereof, or the default in the payment
of any Loan Interest on any Loan made hereunder, and the continuance thereof
for five (5) Business Days after the occurrence thereof.
12.1.2. Non-Payment of Other Amounts.
Default, and continuance thereof for five (5) Business Days after notice
thereof by the Lender to AESOP Leasing, in the payment when due of any amount
payable hereunder (other than any amount described in Section 12.1.1).
12.1.3. Bankruptcy, Insolvency, etc. The
occurrence of an Event of Bankruptcy with respect to ARC, ARAC, AESOP Leasing,
Original AESOP or any Permitted Nominee under any Franchisee Nominee
Agreement.
12.1.4. Non-Compliance With Provisions.
Failure by AESOP Leasing to comply with or to perform any provision of this
Agreement (and not constituting an AESOP I Finance Lease Loan Event of Default
under any of the other provisions of this Section 12.1) and, other than the
failure to comply with the provisions of Sections 10.1 and 10.2 hereof, the
continuance of such failure for 30 days after the earlier of the date of the
receipt of written notice thereof from the Lender or the Trustee to AESOP
Leasing and the date AESOP Leasing learns of such failure.
40
12.1.5. Warranties and Representations.
Any warranty or representation made by or on behalf of AESOP Leasing or
otherwise in connection herewith is inaccurate or incorrect or is breached or
false or misleading in any material respect as of the date such warranty or
representation is made; or any schedule, certificate, financial statement,
report, notice, or other writing furnished by or on behalf of AESOP Leasing to
the Lender is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.
12.1.6. Lease Events of Default. The occurrence of a Lease
Event of Default.
12.1.7. Loan Events of Default Under Other Loan Agreements.
The occurrence of an AESOP I Loan Event of Default.
12.1.8. Judgments. Any final and unappealable (or, if
capable of appeal, such appeal is not being diligently pursued or enforcement
thereof has not been stayed) judgment or order for the payment of money in
excess of $100,000 which is not fully covered by insurance shall be rendered
against AESOP Leasing and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days.
SECTION 12.2. Effect of AESOP I Finance Lease Loan Event of
Default or Liquidation Event of Default. If any AESOP I Finance Lease Loan
Event of Default described in Section 12.1.1 or 12.1.3 or any Liquidation
Event of Default shall occur, the Loan Commitment (if not theretofore
terminated) shall immediately terminate and in the case of any other AESOP I
Finance Lease Loan Event of Default, the Lender may declare its Loan
Commitment (if not theretofore terminated) to be terminated and whereupon it
shall immediately terminate and may declare the Loan Note and all other
Liabilities to be due and payable, whereupon the Loan Note shall become
immediately due and payable.
SECTION 12.3. Rights of Trustee Upon Liquidation Event of
Default and Non-Performance of Certain Covenants. (a) If a Liquidation Event
of Default shall have occurred and be continuing the Lender and the Trustee,
to the extent provided in the Indenture, shall have
41
all the rights against AESOP Leasing and the Loan Collateral provided in the
Indenture upon a Liquidation Event of Default, including the right to take
(under the specified circumstances) possession of all Vehicles immediately.
(b) If (i) AESOP Leasing shall default in the due
performance and observance of any of its obligations under Section 9.3, 9.4,
9.5(iii), 9.8, 10.1 or 10.11 hereof, or (ii) any Lessee shall default in the
due performance and observance of its obligations under Section 31.10 of the
Finance Lease, and such default shall continue unremedied for a period of 30
days after notice thereof shall have been given to AESOP Leasing by the
Lender, the Lender shall have the ability to exercise all rights, remedies,
powers, privileges and claims of AESOP Leasing against the Manufacturers under
or in connection with the Manufacturer Programs with respect to (A) Program
Vehicles leased under the Finance Lease that AESOP Leasing has determined to
turn back to the Manufacturers under such Manufacturer Programs and (B)
whether or not AESOP Leasing shall then have determined to turn back such
Program Vehicles, any Program Vehicles leased under the Finance Lease for
which the applicable Repurchase Period will end within one week or less.
(c) Upon a default in the performance (after giving effect
to any grace periods provided herein) by AESOP Leasing of its obligations
under Section 7.5 or 8.6 hereof with respect to certain Vehicles, the Lender
or the Trustee shall have the right to take actions reasonably necessary to
correct such default with respect to the subject Vehicles including the
execution of UCC financing statements with respect to Manufacturer Programs
and other general intangibles and the completion of Vehicle Perfection and
Documentation Requirements on behalf of AESOP Leasing or the Lender, as
applicable.
(d) Upon the occurrence of a Liquidation Event of Default,
AESOP Leasing will return all Program Vehicles leased under the Finance Lease
to the related Manufacturer and shall sell all Non-Program Vehicles leased
under the Finance Lease in accordance with the instructions of the Lender.
Upon the occurrence of a Limited Liquidation Event of Default with respect to
any Series of Notes, AESOP Leasing will return Program Vehicles leased under
the Finance Lease to the related Manufac-
42
turer, and shall sell Non-Program Vehicles leased under the Finance Lease in
accordance with the instructions of the Lender, to generate proceeds in an
amount which, together with the proceeds of Vehicles returned pursuant to the
AESOP I Operating Lease Loan Agreement and the AESOP II Loan Agreement, will
be sufficient to pay all interest on and principal of such Series of Notes. To
the extent any Manufacturer fails to accept any such Vehicles under the terms
of the applicable Manufacturer Program, the Lender shall have the right to
otherwise dispose of such Vehicles and to direct AESOP Leasing to dispose of
such Vehicles in accordance with its instructions. In addition, the Lender
shall have all of the rights, remedies, powers, privileges and claims
vis-a-vis AESOP Leasing, 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 AESOP
Leasing acknowledges that it has hereby granted the Lender 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 Lender in the
exercise of such rights, remedies, powers, privileges and claims.
SECTION 12.4. Application of Proceeds. The proceeds of any
sale or other disposition on any date pursuant to Section 12.3 shall be
applied in the following order: (i) to the reasonable costs and expenses
incurred by the Lender in connection with such sale or disposition, including
any reasonable costs associated with repairing any Vehicles leased under the
Finance Lease, and reasonable attorneys' fees in connection with the
enforcement of this Agreement; (ii) to the payment of accrued Loan Interest
and outstanding Loan Principal Amount, and all other amounts due hereunder in
the Related Month; and (iii) any remaining amounts to AESOP Leasing, or
such Person as may be lawfully entitled thereto.
SECTION 13. GENERAL.
SECTION 13.1. Waiver; Amendments. No delay on the part of
the Lender or the holder of the Loan Note or other Liabilities 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,
43
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 Agreement or the Loan Note
shall in any event be effective unless (i) the same shall be writing and
signed and delivered by the Lender and AESOP Leasing and consented to in
writing by the Trustee, (ii) the Lender shall have received in writing
confirmation from each of the Rating Agencies that its then current rating
with respect to any outstanding Series of Notes or the Commercial Paper Notes
will not be reduced or withdrawn as a result thereof and (iii) the Rating
Agency Consent Condition shall have been satisfied; provided that any
amendment or modification of the Loan Note need only be signed by AESOP
Leasing.
SECTION 13.2. Confirmations. AESOP Leasing and the Lender
(or the holder of the Loan Note) agree from time to time, upon written request
received by it from the other, to confirm to the other in writing the
aggregate unpaid Loan Principal Amount.
SECTION 13.3. Notices. All notices, amendments, waivers,
consents and other communications provided to any party hereto under this
Agreement 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 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 transmission.
SECTION 13.4. Taxes. AESOP Leasing agrees to pay, and to
save the Trustee and the Lender harmless from all liability for, any document,
stamp, filing, recording, mortgage or other taxes (other than net income taxes
of the Lender) which may be payable in connection with the borrowings
hereunder or the execution, delivery, recording or filing of this Agreement or
of any other instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obligations provided for
in this Section 13.4 shall survive any termination of this Agreement.
44
SECTION 13.5. Indemnification. In consideration of the
Lender's execution and delivery of this Agreement and the Lender's extension
of the Loan Commitment, AESOP Leasing hereby agrees to:
(a) indemnify, exonerate and hold the Lender and its
officers, directors, stockholders, employees, and agents (herein collectively
called "Lender Parties" and individually called a "Lender Party") free and
harmless from and against any and all claims, demands, actions, causes of
action, suits, losses, costs, charges, liabilities, damages, and expenses in
connection therewith (irrespective of whether such Lender Party is a party to
the action for which indemnification hereunder is sought), and including,
without limitation, reasonable attorneys' fees and disbursements (called in
this paragraph the "Indemnified Liabilities"), incurred by Lender Parties or
any of them as a result of, or arising out of, or relating to (i) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan made hereunder or involving any Loan
made hereunder, or (ii) the execution, delivery, performance or enforcement of
this Agreement and any instrument, document or agreement executed pursuant
hereto by any of the Lender Parties, or (iii) the ownership, operation,
maintenance, leasing, or titling of the Vehicles, except in each case, for any
such Indemnified Liabilities arising on account of the relevant Lender Party's
gross negligence or willful misconduct and, to the extent that the foregoing
undertaking may be unenforceable for any reason, AESOP Leasing agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law; and
(b) 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 AESOP
Leasing pursuant to this Agreement 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
45
with the defense of any actual or threatened action, proceeding or claim;
provided, however, AESOP Leasing shall have no 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.
AESOP Leasing agrees that the indemnification provided for in this Section
13.5 shall run directly to and be enforceable by an indemnified party subject
to the limitations hereof. The indemnification provided for in this Section
13.5 shall survive the termination of this Agreement, the Indenture and the
resignation or removal of the Trustee.
SECTION 13.6. Bankruptcy Petition. (a) AESOP Leasing hereby
covenants and agrees that, prior to the date which is one year and one day
after the payment in full of (i) all Commercial Paper Notes Outstanding and
(ii) all Notes Outstanding, it will not institute against, or join any other
Person in instituting against, AFC-II 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 AESOP Leasing takes action in violation of this Section 13.6,
AFC-II agrees, for the benefit of the Noteholders and the Commercial Paper
Note holders, respectively, that it shall file an answer with the bankruptcy
court or otherwise properly contest the filing of such a petition by AESOP
Leasing against AFC-II or commencement of such action and raise the defense
that AESOP Leasing has agreed in writing not to take such action and should be
estopped and precluded therefrom and such other defenses, if any, as its
counsel advises that it may assert. The provisions of this Section 13.6 shall
survive the termination of this Agreement.
(b) AFC-II hereby covenants and agrees that, prior to the
date which is one year and one day after the payment in full of (i) all
Commercial Paper Notes Outstanding, (ii) all Notes Outstanding and (iii) all
Loans outstanding under the AESOP I Loan Agreements, it will not institute
against, or join any other Person in instituting against, AESOP Leasing,
Original AESOP, AESOP Leasing II, AFC, PVHC or Quartx any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceed-
46
ings or other similar proceeding under the laws of the United States or any
state of the United States. In the event that AFC-II takes action with respect
to AESOP Leasing in violation of this Section 13.6, AESOP Leasing agrees, for
the benefit of the Noteholders and the Commercial Paper Note Holders,
respectively, that it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such a petition by AFC-II against
AESOP Leasing or commencement of such action and raise the defense that AFC-II
has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as its counsel advises
that it may assert. The provisions of this Section 13.6 shall survive the
termination of this Agreement.
SECTION 13.7. Submission to Jurisdiction. The Lender may
enforce any claim arising out of this Agreement or the Loan Note in any
state or federal court having subject matter jurisdiction and located in New
York, New York. For the purpose of any action or proceeding instituted with
respect to any such claim, AESOP Leasing hereby irrevocably submits to the
jurisdiction of such courts. AESOP Leasing irrevocably consents to the service
of process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to AESOP Leasing and agrees that such service, to the fullest
extent permitted by law, (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and (ii)
shall be taken and held to be valid personal service upon and personal
delivery to it. Nothing herein contained shall affect the right of the Trustee
and the Lender to serve process in any other manner permitted by law or
preclude the Lender from bringing an action or proceeding in respect hereof in
any other country, state or place having jurisdiction over such action.
AESOP Leasing hereby irrevocably waives, to the fullest extent permitted by
law, any objection which it may have or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court
located in New York, New York and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION 13.8. Governing Law. THIS AGREEMENT AND THE LOAN
NOTE SHALL BE A CONTRACT MADE UNDER AND
47
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. All obligations of
AESOP Leasing and rights of the Lender and the holder of the Loan Note or
Liability 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 relating to any of the Liabilities.
SECTION 13.9. JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT TO WHICH
IT IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR
ANY RELATED TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 13.10. Successors and Assigns. This Agreement shall
be binding upon AESOP Leasing, the Lender and their respective successors and
assigns, and shall inure to the benefit of AESOP Leasing, the Lender, the
Trustee as a third party beneficiary and their respective successors and
assigns; provided, however, that AESOP Leasing shall not have the right to
assign its rights or delegate its duties under this Agreement without (i) the
Lender's and the Trustee's prior written consent 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 the Commercial Paper Notes or
any outstanding Series of Notes as a result thereof. AESOP Leasing
acknowledges that this Agreement and the Loan Note will be assigned by the
Lender to the Trustee pursuant to the Indenture, and hereby agrees that, sub-
ject to the terms of the Indenture, the Trustee may exercise all of the
Lender's rights hereunder. This
48
Agreement and the other Related Documents contain the entire agreement of the
parties hereto with respect to the matters covered hereby.
SECTION 13.11. Tax Treatment of Loans. It is the intention
of the parties hereto that for U.S. federal income tax purposes each Loan made
hereunder will constitute indebtedness of AESOP Leasing to the Lender and
that AESOP Leasing shall be only a lender, and not the owner of the Vehicles
subject to the Finance Lease, in which case the Lessee thereunder shall be the
owner of the Vehicles for tax purposes. The parties agree to take no position
in any tax return, filing or proceeding inconsistent with this provision.
SECTION 13.12. No Recourse. The obligations of AFC-II and
AESOP Leasing under this Agreement are solely the corporate obligations of
AFC-II and AESOP Leasing, respectively. No recourse shall be had for the
payment of any obligation or claim arising out of or based upon this Agreement
against any shareholder, employee, officer, director or incorporator of AFC-II
or AESOP Leasing.
49
Delivered at New York, New York as of the day and year first
above written.
AESOP LEASING L.P.
By: AESOP LEASING CORP.,
its general partner
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
Address: c/o Lord Securities
Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
AESOP FUNDING II L.L.C.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Address: c/o Lord Securities
Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
EXHIBIT A
TO THE LOAN
AGREEMENT
FORM OF LOAN NOTE
_______, 1997
FOR VALUE RECEIVED, AESOP Leasing L.P., a Delaware limited
partnership (the "Borrower"), promises to pay to the order of AESOP Funding II
L.L.C., a Delaware limited liability company (the "Lender"), the aggregate
unpaid Loan Principal Amount of all Loans shown on the schedule attached
hereto (and any continuation thereof) provided, that the failure to so record
any such information or any error in so recording any such information shall
not limit or otherwise affect the actual obligations of the Borrower hereunder
to repay the Loan Principal Amount of all Loans made to it, together with all
Loan Interest accruing thereon, made by the Lender pursuant to that certain
AESOP I Finance Lease Loan Agreement, dated as of July 30, 1997 (together with
all amendments, supplements, restatements and other modifications, if any,
from time to time thereafter made thereto, the "Loan Agreement"), between the
Borrower and the Lender. Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Loan
Agreement.
The Borrower also promises to pay interest on the unpaid Loan
Principal Amount of all Loans hereof from time to time outstanding from the
date hereof until maturity (whether by acceleration or otherwise) and, after
maturity, until paid, at the rates per annum and on the dates specified in the
Loan Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States in same day or immediately available funds to the
account designated by the Lender pursuant to the Loan Agreement.
This Loan Note is the Loan Note referred to in the Loan Agreement and
is entitled to the benefits of the Loan Agreement, and reference is hereby
made to the Loan Agreement for a statement of the terms and conditions on
which the Borrower is permitted and required to make prepayments and
repayments of the Loan Principal Amount of the indebtedness evidenced by this
Loan Note and on which such indebtedness may be declared to be immediately due
and payable.
A-1
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
THIS LOAN NOTE HAS BEEN DELIVERED IN NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
AESOP Leasing L.P.
By:_________________________
Name:
Title:
A-2
TRANSACTIONS ON LOAN NOTE
==================================================================================================================
Amount of
Loan Outstanding
Principal Loan
Amount of Amount Principal
Loan Made Paid Amount Notation
Date This Date This Date This Date Made By
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
==================================================================================================================
X-0
XXXXXXX X-0
TO THE LOAN
AGREEMENT
FORM OF LOAN REQUEST
AESOP Funding II L.L.C.
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, New York 10005
Attention: Xxxxxx X. Xxxxx
Ladies and Gentlemen:
This Loan Request is delivered to you pursuant to Section 3.2 of that
certain AESOP I Finance Lease Loan Agreement, dated as of July 30, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Loan Agreement"), between AESOP Leasing L.P., a Delaware limited
partnership ("AESOP Leasing"), and AESOP Funding II L.L.C., a Delaware limited
liability company (the "Lender"). Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in
the Loan Agreement.
AESOP Leasing hereby requests that a Loan be made in the Amount of
$______________ on _______________ , 19 __.
AESOP Leasing hereby acknowledges that the delivery of this Loan
Request and the acceptance by AESOP Leasing of the proceeds of the Loan
requested hereby constitute a representation and warranty by AESOP Leasing
that, on the date of such Loan, and before and after giving effect thereto and
to the application of the proceeds therefrom, all conditions set forth in
Section 11.2 of the Loan Agreement have been satisfied and all statements set
forth in Section 11.2 of the Loan Agreement are true and correct.
Attached hereto as Annex I is a true and correct copy of the schedule
required to be delivered in connection herewith pursuant to Section 3.2 of the
Loan Agreement.
AESOP Leasing agrees that if prior to the time of the Loan requested
hereby any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Lender. Except to
the
B-1-1
extent, if any, that prior to the time of the Loan requested hereby the Lender
shall receive written notice to the contrary from AESOP Leasing, each matter
certified to herein shall be deemed once again to be certified as true and
correct at the date of such Loan as if then made.
Please wire transfer the proceeds of the Loan to the account of AESOP
Leasing at the financial institution set forth below:
Person to be Paid Name, Address, etc.
Amount to be ----------------- -------------------
Transferred Name Account No.
----------- ---- -----------
$_________ ______ ___________ ___________________
___________________
Attention: ___________________
AESOP Leasing has caused this Loan Request to be executed and
delivered, and the certification and warranties contained herein to be made,
by its duly Authorized Officer this _____ day of _____________, 19___.
AESOP LEASING L.P.
By:
-------------------------------
Name
Title:
B-1-2
ANNEX I
Vehicle Acquisition Schedule and Related Information
1. Principal amount of proposed Loan
2. Borrowing Date of proposed Loan
3. Vehicle Identification Number (VIN)
4. Summary of Vehicles being financed (including, for
Program Vehicles subject to the GM Repurchase Pro-
gram, the Designated Period for such Program Vehi-
cles)
5. Program or Non-Program Vehicles
6. Capitalized Cost (New Vehicles)
7. Net Book Value (Franchisee Vehicles)
B-1-3
EXHIBIT B-2
TO THE LOAN
AGREEMENT
FORM OF LOAN REQUEST RESPONSE
AESOP Leasing L.P.
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, New York 10005
Attention: Xxxxxx X. Xxxxx
_______________________, 199__
Re: Loan Request Dated ____________________, 199__
Ladies and Gentlemen:
This Loan Request Response is delivered to you pursuant to Section
4.1 of that certain AESOP I Finance Lease Loan Agreement, dated as of July 30,
1997 (as amended, supplemented, restated or otherwise modified from time to
time, the "Loan Agreement"), between AESOP Leasing L.P., a Delaware limited
partnership ("AESOP Leasing"), and AESOP Funding II L.L.C., a Delaware limited
liability company (the "Lender"). Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings assigned to
such terms in the Loan Agreement.
Reference is hereby made to the Loan Request delivered to us today by
AESOP Leasing (the "Loan Request"). The applicable rate of Loan Interest on
each Loan requested in the Loan Request is _%; provided, however, if the
Lender's Carrying Cost Interest Rate for the Related Month is higher than the
rate of Loan Interest specified herein, the Loan Interest payable on such
Loans shall be determined using the higher rate.
Very truly yours,
AESOP FUNDING II L.L.C.
By:
-------------------------------
Name:
Title:
B-2-1
EXHIBIT C
TO THE LOAN
AGREEMENT
FORM OF PAYMENT
DEFICIT NOTICE
Xxxxxx Trust and Savings Bank, as Trustee
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Indenture Trust Administration
[Related Enhancement Provider]
[Address]
[ ], 19 _
Ladies and Gentlemen:
This Payment Deficit Notice is delivered to you pursuant to
Section 6.4 of the AESOP I Finance Lease Loan Agreement, dated as of July 30,
1997 (as amended or modified from time to time, the "Loan Agreement") between
AESOP Funding II L.L.C., a Delaware limited liability company, as Lender, and
AESOP Leasing L.P. ("AESOP Leasing"), a Delaware limited partnership, as
Borrower. Terms used herein have the meanings provided in the Loan Agreement.
AESOP Leasing hereby notifies the Trustee and [Related
Enhancement Provider] that on _________, 199_ [a Lease Payment Deficit did not
exist] [there was a Lease Payment Deficit on _________, 199_ as follows:
Series _____: $_______________________
Series _____: $_______________________
AESOP LEASING L.P.
By:
----------------------------
Name:
Title:
C-1
SCHEDULE 8.11
Business Locations, Trade Names
State of
Principal
Place of States in which
Business Location Business Conducts Business
----------------- -------- -----------------
AESOP Leasing x/x Xxxx Xxxxxxxxxx Xxx Xxxx Xxx Xxxx
L.P. Corporation
Two Xxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
