[AESOP I Operating
Lease Loan Agreement]
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LOAN AGREEMENT
dated as of July 30, 1997
among
AESOP LEASING L.P.,
as Borrower,
PV HOLDING CORP.,
as a Permitted Nominee of the Borrower,
QUARTX FLEET MANAGEMENT, INC.
as a Permitted Nominee of the Borrower,
and
AESOP FUNDING II L.L.C.,
as Lender
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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....................... 4
SECTION 1.4. Interpretation................................... 4
SECTION 2. LOAN COMMITMENT OF THE LENDER............................... 5
SECTION 2.1. Loan Commitment.................................. 5
SECTION 2.2. Certain Waivers.................................. 5
SECTION 2.3. Conditions....................................... 6
SECTION 2.4. Use of Proceeds.................................. 6
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.................................................... 8
SECTION 4.1. Interest Rate on Loans........................... 8
SECTION 4.2. Supplemental Interest............................ 8
SECTION 4.3. Loan Interest Payment Dates...................... 8
SECTION 4.4. Setting of Rates................................. 9
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..................... 12
i
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............................ 15
SECTION 7.3. Release of AESOP I Operating
Lease Loan Collateral............................. 15
SECTION 7.4. Change of Location or Name....................... 16
SECTION 7.5. Deliveries; Further Assurances................... 17
SECTION 7.6. [RESERVED]....................................... 17
SECTION 7.7. [RESERVED]....................................... 18
SECTION 7.8. AESOP I Segregated Account....................... 18
SECTION 8. REPRESENTATIONS AND WARRANTIES.............................. 18
SECTION 8.1. Organization; Ownership; Power;
Qualification................................... 18
SECTION 8.2. Authorization; Enforceability.................... 19
SECTION 8.3. Compliance....................................... 19
SECTION 8.4. [RESERVED]....................................... 20
SECTION 8.5. Litigation....................................... 20
SECTION 8.6. Liens............................................ 20
SECTION 8.7. Employee Benefit Plans........................... 20
SECTION 8.8. Investment Company Act........................... 20
SECTION 8.9. Regulations G, T, U and X........................ 21
SECTION 8.10. Proceeds........................................ 21
SECTION 8.11. Business Locations; Trade Names................. 21
SECTION 8.12. Taxes........................................... 21
SECTION 8.13. Governmental Authorizations..................... 22
SECTION 8.14. Compliance with Laws............................ 22
SECTION 8.15. Eligible Vehicles............................... 22
SECTION 8.16. Manufacturer Programs........................... 23
SECTION 8.17. Absence of Default.............................. 23
SECTION 8.18. No Security Interest; Title to
Assets......................................... 23
SECTION 8.19. Accuracy of Information......................... 24
SECTION 9. AFFIRMATIVE COVENANTS....................................... 24
SECTION 9.1. Existence; Foreign Qualification................. 24
SECTION 9.2. Books, Records and Inspections................... 25
SECTION 9.3. Insurance........................................ 25
SECTION 9.4. Manufacturer Programs............................ 26
SECTION 9.5. Reporting Requirements........................... 26
SECTION 9.6. Payment of Taxes; Removal of
Liens............................................. 27
ii
SECTION 9.7. Business......................................... 28
SECTION 9.8. Maintenance of the Vehicles...................... 28
SECTION 9.9. Maintenance of Separate
Existence....................................... 28
SECTION 9.10. Manufacturer Payments; Sales
Proceeds.......................................... 31
SECTION 9.11. Maintenance of Properties....................... 31
SECTION 9.12. Verification of Title........................... 32
SECTION 9.13. Legal Reserve Fund.............................. 32
SECTION 9.14. Delivery of Information......................... 32
SECTION 9.15. [RESERVED]...................................... 32
SECTION 9.16. Vehicles........................................ 32
SECTION 9.17. Assignments..................................... 32
SECTION 9.18. Notation of Liens............................... 33
SECTION 9.19. [RESERVED]...................................... 33
SECTION 9.20. [RESERVED]...................................... 33
SECTION 9.21. [RESERVED]...................................... 33
SECTION 9.22. [RESERVED]...................................... 33
SECTION 9.23. Sale of Non-Program Vehicles
Returned to AESOP Leasing. ...................... 33
SECTION 10. NEGATIVE COVENANTS......................................... 34
SECTION 10.1. Liens........................................... 34
SECTION 10.2. Other Indebtedness.............................. 34
SECTION 10.3. Mergers, Consolidations......................... 34
SECTION 10.4. Sales of Assets................................. 34
SECTION 10.5. Acquisition of Assets........................... 34
SECTION 10.6. Dividends, Officers'
Compensation, etc............................... 34
SECTION 10.7. Organizational Documents........................ 35
SECTION 10.8. Investments..................................... 35
SECTION 10.9. Regulations G, T, U and X....................... 35
SECTION 10.10. Other Agreements............................... 35
SECTION 10.11. Use of Vehicles................................ 35
SECTION 10.12. Use of Proceeds................................ 35
SECTION 10.13. [RESERVED]..................................... 35
SECTION 10.14. Maximum Vehicle Age............................ 36
SECTION 11. CONDITIONS................................................. 36
SECTION 11.1. Initial Loans................................... 36
SECTION 11.2. All Loans....................................... 39
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SECTION 12. LOAN EVENTS OF DEFAULT AND
THEIR EFFECT...................................... 40
SECTION 12.1. AESOP I Operating Lease Loan Events
of Default........................................ 40
12.1.1. Non-Payment of Loans..................... 40
12.1.2. Non-Payment of Other Amounts............. 40
12.1.3. Bankruptcy, Insolvency, etc.............. 40
12.1.4. Non-Compliance With Provisions........... 41
12.1.5. Warranties and Representations........... 41
12.1.6. Lease Events of Default.................. 41
12.1.7. Loan Events of Default Under
Other Loan Agreements..................... 41
12.1.8. Judgments................................ 41
SECTION 12.2. Effect of AESOP I Operating Lease
Loan Event of Default or Liquidation
Event of Default.......................... 41
SECTION 12.3. Rights of Trustee Upon Liquidation
Event of Default and Non-Performance
of Certain Covenants...................... 42
SECTION 12.4. Application of Proceeds......................... 43
SECTION 13. GENERAL.................................................... 44
SECTION 13.1. Waiver; Amendments.............................. 44
SECTION 13.2. Confirmations................................... 44
SECTION 13.3. Notices......................................... 44
SECTION 13.4. Taxes........................................... 45
SECTION 13.5. Indemnification................................. 45
SECTION 13.6. Bankruptcy Petition............................. 46
SECTION 13.7. Submission to Jurisdiction...................... 47
SECTION 13.8. Governing Law................................... 48
SECTION 13.9. JURY TRIAL...................................... 48
SECTION 13.10. Successors and Assigns......................... 49
SECTION 13.11. Tax Treatment of Loans......................... 49
SECTION 13.12. No Recourse.................................... 49
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 NOTIFICATION OF LEASE PAYMENT DEFICIT
iv
SCHEDULE 8.11 BUSINESS LOCATIONS, TRADE NAMES
v
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 30, 1997 (the
"Agreement"), is entered into among AESOP LEASING L.P., a Delaware limited
partnership ("AESOP Leasing" or the "Borrower"), PV HOLDING CORP., a Delaware
corporation ("PVHC"), as a Permitted Nominee of the Borrower, QUARTX FLEET
MANAGEMENT, INC., a Delaware corporation ("Quartx"), as a Permitted Nominee of
the Borrower, and AESOP FUNDING II L.L.C., a Delaware limited liability company
("AFC-II" or the "Lender").
BACKGROUND
AESOP Leasing intends to purchase and finance 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 then lease to ARAC and certain other Eligible Rental Car
Companies for use in their respective daily vehicle rental businesses pursuant
to the AESOP I Operating Lease, and AESOP Leasing desires to obtain financing
for such Vehicles from the Lender.
AESOP Leasing has appointed PVHC pursuant to the PVHC/BONY
Nominee Agreement and Quartx pursuant to the Quartx Nominee Agreement to act as
nominee titleholders for the sole purpose of holding registered title to
certain Vehicles acquired by AESOP Leasing.
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 Finance 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
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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 Finance 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 the right, title and interest of AESOP Leasing, PVHC and Quartx in and
to (a) the Vehicles leased under the AESOP I Operating 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 Lessees and ARC under
the AESOP I Operating 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 determi-
3
nation 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 references 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 Agreement, 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
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(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 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
Operating 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 Operating 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 Operating 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.
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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 purchase Eligible
Vehicles that it will lease to ARAC and certain other Eligible Rental Car
Companies pursuant to the AESOP I Operating Lease for use in their respective
daily vehicle rental businesses.
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
Initial 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
Finance 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
6
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.
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
7
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").
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.
8
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 AESOP I Operating Lease at any time during the Related Month or (b)
described in clauses (iii) or (iv) of this Section 5.1, plus (ii) all upfront
incentive payments paid by Manufacturers during the Related Month in respect of
purchases of Non-Program Vehicles leased under the AESOP I Operating 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 AESOP I Operating 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 AESOP I Operating 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
AESOP I Operating 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
9
Vehicles leased under the AESOP I Operating 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 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,
10
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 AESOP I Operating 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 AESOP I Operating 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 Operating 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 AESOP I Operating 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 AESOP
I Operating Lease, plus (ii) proceeds from the sale of Vehicles leased under
the AESOP I Operating Lease to third parties (other than to the Manufacturer or
pursuant to a Guaranteed Depreciation Program), in each case deposited in the
11
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.
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, each of
AESOP Leasing, PVHC and Quartx 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 AESOP I
Operating Lease, and all Certificates of Title with
respect thereto;
(ii) all right, title and interest of each of AESOP
Leasing, PVHC and Quartx 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 AESOP I Operating 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 each of AESOP
Leasing, PVHC and Quartx in, to and under the AESOP I Operating Lease
and the related Lessee Agreements (other than any right, title and
interest of any of AESOP Leasing, PVHC and Quartx with re-
12
spect to any Excluded Payments) including, without limitation, all
monies due and to become due to any of AESOP Leasing, PVHC and Quartx
from any of the Lessees or the Guarantor or any of their assigns under
or in connection with the AESOP I Operating Lease 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 any of AESOP Leasing, PVHC and Quartx
under the AESOP I Operating Lease), fees, expenses, costs,
indemnities, insurance recoveries, damages for the breach of any of
the AESOP I Operating Lease and the related Lessee Agreements or
otherwise, and all rights, remedies, powers, privileges and claims of
each of AESOP Leasing, PVHC and Quartx against any other party under
or with respect to the AESOP I Operating Lease and the related Lessee
Agreements (whether arising pursuant to the terms of the AESOP I
Operating Lease or the related Lessee Agreements or otherwise
available to AESOP Leasing, PVHC or Quartx at law or in equity), the
right to enforce the AESOP I Operating Lease 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 AESOP I Operating Lease and the
related Lessee Agreements or the obligations of any party thereunder,
and all collateral pledged under the AESOP I Operating Lease;
(iv) all right, title and interest of each of AESOP
Leasing, PVHC and Quartx 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 Operating 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;
13
(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
AESOP I Operating Lease;
(vi) all right, title and interest of each of AESOP
Leasing, PVHC and Quartx in and to any proceeds from the sale of
Vehicles leased under the AESOP I Operating Lease, including all
monies due in respect of such Vehicles under the AESOP I Operating
Lease, whether payable as the purchase price of such Vehicles, auction
sales proceeds, or as fees, expenses, costs, indemnities, insurance
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 AESOP I Operating Lease granted to any of
AESOP Leasing, PVHC and Quartx pursuant to the AESOP I Operating 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 each of AESOP Leasing, PVHC and Quartx
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, each of AESOP Leasing,
PVHC and Quartx 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 Operating 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,
14
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 AESOP I Operating Lease
(other than Certificates of Title with respect to the Initial PVT Vehicles, for
which BONY is noted as the first lienholder, and Certificates of Title with
respect to Vehicles titled in the states of Nebraska, Ohio and Oklahoma) 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.
SECTION 7.3. Release of AESOP I Operating Lease Loan
Collateral. The Lender shall request the Trustee in writing to release its Lien
on a Vehicle leased under the AESOP I Operating 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 Program 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 AESOP I Operating Lease, from and after the earliest of (a) in
the case of a Program Vehicle or a
15
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 Program 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 provisions 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, none of AESOP Leasing, PVHC or Quartx will 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 Operating Lease
Loan Collateral (except, (a) as to perfection and priority, with respect to
Vehicles titled in the states of Nebraska, Ohio and Oklahoma and (b) that the
lien of the Trustee shall not be noted on the Certificates of Title with
respect to the Initial PVT Vehicles), free and clear of any Lien whatsoever
except for Permitted Liens; provided, however, that notwithstanding the
foregoing, none of AESOP Leasing, PVHC or Quartx shall change the location of
its principal place of business, chief executive office, major execu-
16
tive 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. Each of AESOP
Leasing, PVHC and Quartx 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 Operating 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 Operating Lease Loan Collateral, and
(ii) execute and deliver, or cause to be executed and delivered, to the Lender
or the Trustee 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 Operating Lease Loan Collateral (except, as to perfection, with
respect to Vehicles titled in the states of Nebraska, Ohio and Oklahoma) 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
17
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 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 to itself, and each of PVHC and
Quartx represents and warrants to the Lender as to itself, 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.
Each of AESOP Leasing, PVHC and Quartx is (i) a limited partnership or a
corporation, as the case may be, 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 proper-
18
ties or the nature of its businesses requires such qualification or
authorization.
SECTION 8.2. Authorization; Enforceability. Each of AESOP
Leasing, PVHC and Quartx 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 each of AESOP
Leasing, PVHC and Quartx and is, and each of the other Related Documents to
which any of AESOP Leasing, PVHC or Quartx is a party is, a legal, valid and
binding obligation of such party, enforceable in accordance with its terms.
SECTION 8.3. Compliance. The execution, delivery and
performance by each of AESOP Leasing, PVHC and Quartx 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, PVHC
or Quartx, as the case may be, which violation could result in a Material
Adverse Effect, (iii) conflict with, result in a breach of, or constitute a
default under the certificate of limited partnership or limited partnership
agreement of AESOP Leasing or under the certificate of incorporation, as
amended, or by-laws of each of PVHC and Quartx, or under any indenture,
agreement, or other instrument to which any of AESOP Leasing, PVHC or Quartx 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 any of AESOP Leasing, PVHC or Quartx 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 any of AESOP Leasing, PVHC
or Quartx, threatened against or affecting any of AESOP Leasing, PVHC or Quartx
before any court or arbitrator or any Governmental Authority in which there is
a reasonable possibility of an
19
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, PVHC or
Quartx, as the case may be, or which in any manner draws into question the
validity or enforceability of this Agreement or any other Related Document or
the ability of any of AESOP Leasing, PVHC or Quartx to comply with any of the
respective terms hereunder or thereunder.
SECTION 8.6. Liens. The AESOP I Operating 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 Operating Lease Loan Collateral
(except, with respect to perfection and priority, Vehicles titled in the states
of Nebraska, Ohio and Oklahoma). All Vehicle Perfection and Documentation
Requirements with respect to all Vehicles leased under the AESOP I Operating
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. None of AESOP Leasing,
PVHC or Quartx have established and maintain or contribute to any employee
benefit plan that is covered by Title IV of ERISA, and none of AESOP Leasing,
PVHC or Quartx will 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. None of AESOP Leasing,
PVHC or Quartx is or is controlled by an "investment company," within the
meaning of the Investment Company Act, and none of AESOP Leasing, PVHC or
Quartx is 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 any of AESOP
Leasing, PVHC or Quartx 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. None of AESOP
Leasing, PVHC or Quartx is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carry-
20
ing 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, PVHC or
Quartx, any Affiliate of any of AESOP Leasing, PVHC or Quartx or any Person
acting on its or their 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 purchase or finance Eligible Vehicles that
will be leased under the AESOP I Operating Lease.
SECTION 8.11. Business Locations; Trade Names. Schedule 8.11
lists each of the locations where AESOP Leasing, PVHC or Quartx maintains a
chief executive office, principal place of business, or any records, and
Schedule 8.11 also lists the legal name of each of AESOP Leasing, PVHC and
Quartx and each name under or by which it conducts its business.
SECTION 8.12. Taxes. Each of AESOP Leasing, PVHC and Quartx
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 Closing Date, to
the best of AESOP Leasing's, PVHC's and Quartx's knowledge, there is no
unresolved claim by a taxing authority concerning AESOP Leasing's, PVHC's or
Quartx'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.
21
SECTION 8.13. Governmental Authorizations. Each of AESOP
Leasing, PVHC and Quartx 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. Each of AESOP Leasing,
PVHC and Quartx: (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 AESOP I Operating Lease was, on the date of purchase or financing thereof
by AESOP Leasing, an Eligible Vehicle.
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
22
its certificate of limited partnership and limited partnership agreement and
each of PVHC and Quartx is in compliance with all provisions of its certificate
of incorporation, as amended, and by-laws and no event has occurred or failed
to occur which has not been remedied or waived, the occurrence or
non-occurrence of which constitutes, 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 any of AESOP Leasing, PVHC or Quartx under any indenture, agreement or other
instrument, or any judgment, decree or final order to which any of AESOP
Leasing, PVHC or Quartx is a party or by which any of AESOP Leasing, PVHC or
Quartx 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 AESOP I
Operating Lease (other than the Initial PVT Vehicles, for which BONY is noted
as the first lienholder, and other than Vehicles titled in the states of
Nebraska, Ohio and Oklahoma) of the Trustee's lien for the benefit of the
Noteholders) to protect and perfect AFC-II's security interest in the AESOP I
Operating Lease Loan Collateral and the Trustee's security interest on behalf
of the Secured Parties in the Collateral now in existence and hereafter
acquired or created has been duly and effectively taken.
(b) Each of AESOP Leasing, PVHC and Quartx 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 any of AESOP Leasing, PVHC or Quartx as debtor or which
covers or purports to cover any of the assets of any of AESOP Leasing, PVHC or
Quartx is on file in any state or other jurisdiction, and none of AESOP
Leasing, PVHC or Quartx has signed any such financing statement, application or
instrument authorizing any secured party or creditor of such Person thereunder
to
23
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 any of
AESOP Leasing, PVHC or Quartx 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, PVHC or Quartx, as the case may
be, 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, each of AESOP Leasing, PVHC and Quartx
agrees that, unless at any time the Lender shall otherwise expressly consent in
writing:
SECTION 9.1. Existence; Foreign Qualification. Each of AESOP
Leasing, PVHC and Quartx will do and cause to be done at all times all things
necessary to (i) maintain and preserve its existence as a limited partnership
or a corporation, as the case may be, (ii) be, and ensure that it is, duly
qualified to do business and in good standing as a foreign limited partnership
or foreign corporation, as the case may be, 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 (iii) comply with all Contractual Obligations and
Requirements of Law
24
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 maintain complete and accurate books and records with respect to the AESOP
I Operating Lease Loan Collateral and each of AESOP Leasing, PVHC and Quartx
will 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 AESOP I Operating 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 higher, 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 AESOP I Operating 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 written notice of
25
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 AESOP I Operating
Lease which are Program Vehicles (subject to the redesignation provisions of
Section 2.7 of the AESOP I Operating 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 Lessees
required to be delivered to AESOP Leasing pursuant to Section 31.5 of
the AESOP I Operating 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;
26
(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
Operating 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 AESOP I Operating Lease or
against PVHC or Quartx as a result of its holding legal title to the
Vehicles leased under the AESOP I Operating 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
any of AESOP Leasing, PVHC or Quartx 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. Each of
AESOP Leasing, PVHC and Quartx 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, PVHC or
Quartx, as the case may be, 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, none of AESOP Leasing, PVHC
or Quartx shall 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, PVHC or Quartx, as the case may be, 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
27
to the right of AESOP Leasing, PVHC or Quartx, as the case may be, to settle
any such contest).
SECTION 9.7. Business. Each of AESOP Leasing, PVHC and Quartx
will engage only in businesses conducted on the date hereof.
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 AESOP I Operating 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 AESOP I Operating
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, Original AESOP, AESOP Leasing II, 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
28
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 Original AESOP, AESOP Leasing
II, AFC, AFC-II, ARC, ARAC, the Affiliates of the foregoing or any other
affiliated 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
Original AESOP, AESOP Leasing II, AFC, AFC-II, ARAC or ARC or any Affiliates of
the foregoing; (C) having obligations guaranteed by Original AESOP, AESOP
Leasing II, AFC, AFC-II, ARAC or ARC or any Affiliates of the foregoing; (D)
holding itself out as responsible for debts of Original AESOP, AESOP Leasing
II, AFC, AFC-II, ARAC or ARC or any Affiliates of the foregoing or for
decisions or actions with respect to the affairs of Original AESOP, AESOP
Leasing II, 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 Original AESOP, AESOP Leasing II, 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 Original AESOP, AESOP Leasing II, 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
Original AESOP, AESOP Leasing II, 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 Original AESOP, AESOP Leasing II, 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
29
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 pay
the claims of creditors of Original AESOP, AESOP Leasing II, 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 Original AESOP, AESOP
Leasing II, 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
Original AESOP, AESOP Leasing II, AFC, AFC-II, ARAC or ARC or any Affiliates of
the foregoing) and a telephone number separate and apart from that of Original
AESOP, AESOP Leasing II, 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
Original AESOP, AESOP Leasing II, 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 Original AESOP,
AESOP Leasing II, 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 Original AESOP, AESOP Leasing II, 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 Original
AESOP, AESOP Leasing II, AFC, AFC-II, AESOP Leasing, ARAC, ARC or any Affiliate
of ARC, to substantively consolidate Original AESOP, AESOP Leasing II, AFC,
AFC-II or AESOP Leasing with ARAC, ARC or any Affiliate of ARC; (xxiii)
remaining solvent and
30
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 Original
AESOP, AESOP Leasing II, AESOP Leasing, AFC, AFC-II, ARAC, ARC and the
Affiliates of the foregoing or any other affiliated or unaffiliated entity.
AESOP Leasing acknowledges 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 Original AESOP,
AESOP Leasing II, AFC, AFC-II and AESOP Leasing on the other hand and as among
Original AESOP, AESOP Leasing II, 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. Each of AESOP
Leasing, PVHC and Quartx will maintain or cause to be maintained in the
ordinary course of business in
31
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 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. Each of AESOP Leasing,
PVHC and Quartx will provide to the
32
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 maintain good and
marketable title to each Vehicle purchased by AESOP Leasing with the proceeds
of Loans made hereunder and leased under the AESOP I Operating 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 AESOP I Operating Lease (other than Certificates of
Title for the Initial PVT Vehicles, which Certificate of Title will show BONY
as the first lienholder, and Vehicles titled in the states of Nebraska, Ohio
and Oklahoma) 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 (other than perfection of the
security interest of the Trustee in Vehicles by notation of the lien of the
Trustee on the Certificates of Title for Vehicles titled in the States of
Nebraska, Ohio and Oklahoma), protect and preserve the rights, titles,
interests, remedies, powers, privileges, licenses and security interest of the
Trustee
33
in such Vehicles and other AESOP I Operating 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 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 and (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.
34
SECTION 9.23. Sale of Non-Program Vehicles Returned to AESOP
Leasing. In the event that any NonProgram Vehicle leased under the AESOP I
Operating Lease is returned to AESOP Leasing in accordance with Section 2.6(c)
of the AESOP I Operating 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 AESOP I Operating 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, each of AESOP Leasing, PVHC and Quartx
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 capital
stock, as the
35
case may be, or make any other distribution on, or any purchase, redemption or
other acquisition of, any of its partnership interests or any shares of its
capital stock, as the case may be, except, in the case of AESOP Leasing, 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 the case of AESOP Leasing, only from
funds in the AESOP I Segregated Account.
SECTION 10.7. Organizational Documents. Amend any of its
organizational documents, including its certificate of limited partnership or
limited partnership agreement or certificate of incorporation or by-laws, as
the case may be, 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 AESOP I Operating 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.
36
SECTION 10.12. Use of Proceeds. Use or permit the proceeds of
the Loans made hereunder to be used for any purpose other than to purchase or
finance Eligible Vehicles that will be leased under the AESOP I Operating
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 Non-Program Vehicle Amount as of any
Payment Date to exceed any applicable Maximum Non-Program Vehicle Amount, (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 and (e) the
Specified States Amount as of any Payment Date to exceed any applicable Maximum
Specified States Amount.
SECTION 10.14. Maximum Vehicle Age. Permit at any time the
age of any Non-Program Vehicle leased under the AESOP I Operating 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;
37
(b) Certificate of Limited Partnership; Certificates 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 each of Original AESOP, PVHC and Quartx, duly certified by the
Secretary of State of the State of Delaware, together with a copy of the
by-laws of each of Original AESOP, PVHC and Quartx, duly certified by the
Secretary or an Assistant Secretary of Original AESOP, PVHC and Quartx, as the
case may be.
(c) Resolutions. Copies of resolutions of the Board of
Directors of each of Original AESOP, PVHC and Quartx, authorizing or ratifying
the execution, delivery and performance of those documents and matters required
of it with respect to this Agreement, duly certified by the Secretary or an
Assistant Secretary of Original AESOP, PVHC or Quartx, as the case may be;
(d) Consents, etc. Certified copies of all documents
evidencing any necessary limited partnership or corporate 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 each of Original AESOP, PVHC and Quartx 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 Rating Agencies, the
Placement Agents and the Administrative Agent, on behalf of the Liquidity
Lenders, and the opin-
38
ions 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 each of AESOP Leasing, Original AESOP, PVHC and Quartx 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 any of AESOP Leasing, PVHC or Quartx, 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 reports from a Person satisfactory
to the Lender and the Trustee showing no evidence of such liens filed against
AESOP Leasing, PVHC or Quartx;
(i) Evidence. Evidence (which may be telephonic, followed by
prompt written confirmation) of the filing of proper financing statements on
Form UCC-1, naming (1) AESOP Leasing as debtor, (2) PVHC as debtor and (3)
Quartx as debtor, and 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;
39
(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 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-
40
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 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 Operating Lease Loan Event of Default or AESOP I Operating
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 Operating Lease Loan Events of Default.
Each of the following shall constitute an AESOP I Operating 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; provided, however, that in the case
of any failure to pay an amount owing pursuant to Section 5.1(B)(iii) or
5.1(B)(iv)(y), an AESOP I Operat-
41
ing Lease Loan Event of Default shall occur only to the extent that at the end
of the applicable continuance period referred to above, an Enhancement
Deficiency exists with respect to any Series of Notes or an AESOP I Operating
Lease Vehicle Deficiency exists.
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, any other Lessee under the AESOP
I Operating Lease, AESOP Leasing, Original AESOP, PVHC or Quartx.
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 Operating 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.
12.1.5. Warranties and Representations. Any warranty or
representation made by or on behalf of AESOP Leasing 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 mis-
leading 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 Finance Lease Loan Event of Default or an AESOP II
Loan Event of Default.
42
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 Operating Lease Loan Event of
Default or Liquidation Event of Default. If any AESOP I Operating 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 Operating
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 all the rights against AESOP
Leasing, PVHC and Quartx 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 AESOP I Operating
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, PVHC or Quartx against the Manufacturers under or in
connection with the Manufacturer Programs with respect to (A) Program Vehicles
leased
43
under the AESOP I Operating 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 AESOP I Operating 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, PVHC or Quartx 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,
PVHC, Quartx 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 AESOP I
Operating Lease to the related Manufacturer and shall sell all Non-Program
Vehicles leased under the AESOP I Operating 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 AESOP I Operating Lease to the related
Manufacturer, and shall sell Non-Program Vehicles leased under the AESOP I
Operating 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 Finance 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, PVHC and Quartx necessary or desirable to
allow the Trustee to exercise the rights, remedies, powers, privi-
44
leges and claims given to the Trustee pursuant to Sections 9.2 and 9.3 of the
Base Indenture and each of AESOP Leasing, PVHC and Quartx 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 AESOP
I Operating 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, 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, AESOP Leasing, PVHC and Quartx 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.
45
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.
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
46
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
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.
47
SECTION 13.6. Bankruptcy Petition. (a) Each of AESOP Leasing,
PVHC and Quartx 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, PVHC or Quartx 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, PVHC or Quartx against AFC-II or
commencement of such action and raise the defense that each of AESOP Leasing,
PVHC and Quartx 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 proceedings 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, PVHC or Quartx in violation of this Section 13.6, each of AESOP
Leasing, PVHC and Quartx 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, PVHC or Quartx 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
48
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. Each of AESOP Leasing, PVHC and Quartx irrevocably consents to
the service of process out of said courts by mailing a copy thereof, by
registered mail, postage prepaid, to AESOP Leasing, PVHC or Quartx, as the case
may be, and agrees that such service, to the fullest extent permitted by law,
(i) shall be deemed in every respect effective service of process upon it in
any such suit, action or proceeding and (ii) shall be taken and held to be
valid personal service upon and personal delivery to it. Nothing herein
contained shall affect the right of the Trustee and the 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. Each of AESOP Leasing, PVHC and Quartx
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 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, PVHC and Quartx
and rights of the Lender and the
49
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, PVHC, Quartx, the Lender and their respective
successors and assigns, and shall inure to the benefit of AESOP Leasing, PVHC,
Quartx, the Lender, the Trustee as a third party beneficiary and their
respective successors and assigns; provided, however, that none of AESOP
Leasing, PVHC or Quartx shall 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. Each of AESOP Leasing, PVHC and Quartx 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, subject to the terms of the
Indenture, the Trustee may exercise all of the Lender's rights hereunder.
This 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 the owner of the Vehicles that are subject to the
AESOP I Operating Lease. The parties
50
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, AESOP
Leasing, PVHC and Quartx under this Agreement are solely the corporate
obligations of AFC-II, AESOP Leasing, PVHC and Quartx, 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, AESOP Leasing, PVHC and Quartx.
51
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:____________________
Name:
Title:
Address: c/o Lord Securities
Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
PV HOLDING CORP.
By:____________________
Name:
Title:
Address: c/o The Corporation
Trust Company
Corporation Trust
Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
QUARTX FLEET MANAGEMENT, INC.
By:____________________
Name:
Title:
Address: c/o The Corporation
Trust Company
Corporation Trust
Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
AESOP FUNDING II L.L.C.
By:_____________________
Name:
Title:
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 liability
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
Operating 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"), among the
Borrower, PV Holding Corp. and Quartx Fleet Management, Inc., as Permitted
Nominees of 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 Operating Lease Loan Agreement, dated as of July 30, 1997 (as
amended, supplemented, restated or otherwise modified from time to time, the
"Loan Agreement"), among AESOP Leasing L.P., a Delaware limited partnership
("AESOP Leasing"), PV Holding Corp. and Quartx Fleet Management, Inc., as
Permitted Nominees of 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.
B-1-1
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 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:
Amount to be Person to be Paid Name, Address, etc.
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 Operating Lease Loan Agreement, dated as of July 30,
1997 (as amended, supplemented, restated or otherwise modified from time to
time, the "Loan Agreement"), among AESOP Leasing L.P., a Delaware limited
partnership ("AESOP Leasing"), PV Holding Corp. and Quartx Fleet Management,
Inc., as Permitted Nominees of 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 Operating Lease Loan Agreement, dated as of July 30,
1997 (as amended or modified from time to time, the "Loan Agreement") among
AESOP Funding II L.L.C., a Delaware limited liability company, as Lender, PV
Holding Corp. and Quartx Fleet Management, Inc., as Permitted Nominees of the
Borrower, 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 [a Lease Payment Deficit did not exist on ________,
199_] [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
