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Exhibit 4.20
EXECUTION COPY
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
dated as of April 30, 1996
between
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor, and
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer
AS SET FORTH IN SECTION 27 HEREOF, LESSOR HAS ASSIGNED TO NFLP (AS DEFINED
HEREIN) AND NFLP HAS ASSIGNED TO THE TRUSTEE (AS DEFINED HEREIN) CERTAIN OF ITS
RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE. TO THE EXTENT, IF ANY, THAT THIS
LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION) NO SECURITY
INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
TRUSTEE ON THE SIGNATURE PAGE THEREOF.
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TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS .............................................1
Section 1.1. Certain Definitions ....................................1
Section 1.2. Accounting and Financial ...............................2
Section 1.3. Cross References; Headings .............................2
Section 1.4. Interpretation .........................................2
SECTION 2. GENERAL AGREEMENT ................................................3
Section 2.1. Leasing of Vehicles ....................................3
Section 2.2. Right of Lessee to Act as Lessor's Agent ...............4
Section 2.3. Payment of Purchase Price by Lessor; Certain
Additional Payments to the Servicer ...........................5
Section 2.4. Non-liability of Lessor ................................5
SECTION 3. TERM .............................................................6
Section 3.1. Vehicle Lease Commencement Date ........................6
Section 3.2. Lease Commencement Date ................................6
SECTION 4. CONDITIONS PRECEDENT .............................................7
Section 4.1. No Default .............................................7
Section 4.2. Texas Vehicles .........................................7
Section 4.3. Other Conditions .......................................7
SECTION 0.XXXX AND CHARGES ..................................................7
Section 5.1 Payment of Rent ........................................7
Section 5.2. Payment of Availability Payment ........................7
Section 5.3. Payment of Monthly Supplemental Payment ................8
Section 5.4. Payment of Termination Payments, Casualty
Payments, and Late Return Payments ............................8
Section 5.5. Late Payment ...........................................8
SECTION 6. Reserved ........................................................8
SECTION 7. CASUALTY OBLIGATION .............................................8
SECTION 8. VEHICLE USE .....................................................8
SECTION 9. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES
AND FINES ..........................................................10
SECTION 10. MAINTENANCE AND REPAIRS ........................................11
SECTION 11. VEHICLE WARRANTIES .............................................11
SECTION 12. PROGRAM VEHICLE USAGE REQUIREMENTS AND DISPOSITION .............12
Section 12.1. Usage ................................................12
Section 12.2. Disposition Procedure.................................12
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Section 12.3. Termination Payments..................................13
SECTION 13. LATE RETURN PAYMENTS............................................13
SECTION 14. REDESIGNATION OF VEHICLES.......................................14
SECTION 15. GENERAL INDEMNITY...............................................14
Section 15.1. Indemnity of the Lessor...............................14
Section 15.2. Indemnification of the Trustee........................16
Section 15.3. Reimbursement Obligation by the Lessee................17
Section 15.4 Notice to Lessee of Claims ...........................17
Section 15.5 Defense of Claims ....................................17
SECTION 16. SUCCESSORS AND ASSIGNS; ASSIGNMENT..............................18
SECTION 17 DEFAULT AND REMEDIES THEREFOR
Section 17.1 Events of Default.....................................18
Section 17.2. Effect of Lease Event of Default......................18
Section 17.3. Rights of Lessor Upon Lease Event of
Default .......................................................20
Section 17.4. Measure of Damages....................................21
Section 17.5. Application of Proceeds...............................24
SECTION 18. MANUFACTURER EVENTS OF DEFAULT ................................25
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE.........................25
SECTION 20. SURVIVAL ......................................................25
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL AGENT
AND TRUSTEE.........................................................25
SECTION 22. MODIFICATION AND SEVERABILITY ..................................28
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES..........................28
Section 23.1. Organization; Ownership; Power;
Qualification ................................................28
Section 23.2 Authorization; Enforceability ........................28
Section 23.3 Compliance ...........................................29
Section 23.4 Financial Information; Financial Condition ...........29
Section 23.5 Litigation ...........................................30
Section 23.6 Liens ................................................30
Section 23.7 Employee Benefit Plans ...............................31
Section 23.8 Investment Company Act ...............................31
Section 23.9 Regulations G, T, U and X ............................31
Section 23.10 Business Locations; Trade Names .....................31
Section 23.11 Taxes ...............................................32
Section 23.12 Governmental Authorizations .........................32
Section 23.13 Absence of Default ..................................32
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Section 23.14 Compliance with Requirements of Law .................32
Section 23.15 Accuracy of Information .............................32
Section 23.16 Solvency ............................................33
Section 23.17 Stock Ownership .....................................33
Section 23.18 Necessary Actions ...................................33
Section 23.19 Supplemental Documents True and Correct .............33
Section 23.20 Eligible Vehicles; Eligible Franchisees .............33
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS...................................33
Section 24.1 Corporate Existence; Foreign Qualifications .........34
Section 24.2 Books, Records and Inspections ......................34
Section 24.3 Accounting Methods; Financial Records ...............34
Section 24.4 Insurance ...........................................35
Section 24.5 Manufacturer Programs ...............................35
Section 24.6 Reporting Requirements ..............................36
Section 24.7 Taxes and Liabilities ...............................40
Section 24.8 Maintenance of Separate Existence ...................41
Section 24.9 Maintenance of Credit Enhancement ...................41
Section 24.10 Manufacturer Payments; Sales Proceeds ...............41
Section 24.11 Compliance with Requirements of Law .................42
Section 24.12 Delivery of Information .............................42
Section 24.13 Master Collateral Agent as Lienholder ...............42
Section 24.14 Maintenance of the Vehicles .........................42
Section 24.15 Certificates of Title ...............................42
Section 24.16 Release of Collateral ...............................43
Section 24.17 Change of Location or Name ..........................43
Section 24.18 Deliveries; Further Assurances ......................44
Section 24.19 Additional Actions ..................................44
Section 24.20. Subleases ..................................................45
SECTION 25. CERTAIN NEGATIVE COVENANTS ....................................45
Section 25.1 Mergers, Consolidations .............................45
Section 25.2 Regulations G, T, U and X ...........................46
Section 25.3 Liens ...............................................46
Section 25.4 Use of Vehicles .....................................46
Section 25.5 Percentage of Non-Program Vehicles ..................46
Section 25.6 Acquisition and Financing of Vehicles ...............46
SECTION 26. SERVICING COMPENSATION ........................................47
SECTION 27. BANKRUPTCY PETITION AGAINST LESSOR ............................48
SECTION 28. FORUM SELECTION AND CONSENT TO JURISDICTION ...................48
SECTION 29. GOVERNING LAW .................................................49
SECTION 30. JURY TRIAL ....................................................49
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SECTION 31. NOTICES .......................................................49
SECTION 32. HEADINGS ......................................................50
SECTION 33. EXECUTION IN COUNTERPARTS .....................................50
SECTION 34. EFFECTIVENESS .................................................50
SCHEDULES AND ATTACHMENTS
Schedule 23.10 Business Locations
ATTACHMENTS A-1 Information on Refinanced Vehicles
ATTACHMENTS A-2 Vehicle Acquisition Schedule
ATTACHMENTS B Form of Power of Attorney
ATTACHMENTS C Form of Certification of Trade or Business Use
EXHIBITS
EXHIBIT A Form of Monthly Certificate
EXHIBIT B Form of Monthly Noteholders' Statement
EXHIBIT C Form of Annual Certificate
EXHIBIT D Form of Joinder to Intercreditor Agreement
EXHIBIT E Form of Notice of Lease Payment Deficit
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MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
This Master Motor Vehicle Lease and Servicing Agreement (the "Base
Lease" and, as supplemented by the Lease Annexes, this Agreement" or "Lease"),
dated as of April 30, 1996, by and between NATIONAL CAR RENTAL FINANCING LIMITED
PARTNERSHIP, a Delaware corporation (the "'Lessor" or "NFLP"), and NATIONAL CAR
RENTAL SYSTEM, INC., a Delaware corporation ("National"), in its capacity as
lessee (the "Lessee") and as servicer (the "Servicer").
W I T N E S S E T H:
WHEREAS, the Lessor (such capitalized term, together with all other
capitalized terms used herein, shall have the meaning assigned thereto in
Section 1) intends to refinance the Refinanced Vehicles and to purchase, and
finance the purchase of, additional Eligible Vehicles from one or more
Manufacturers with the proceeds obtained by the issuance of its Notes issued
pursuant to the Indenture and with certain other funds; and
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, Vehicles for use in the Lessee's domestic daily rental
car operations;
WHEREAS, the Lessee desires to refinance the Refinanced Vehicles and
finance the acquisition of the Financed Vehicles and retain tax ownership of
such Refinanced Vehicles and Financed Vehicles and Lessor desires to facilitate
such financing.
NOW, THEREFORE, in consideration of the foregoing premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
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 or in the Annexes hereto shall have the meanings assigned to such terms
in the Definitions List, attached as Schedule 1 to the Base Indenture, dated as
of April 30, 1996 (as such agreement may be amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms, the "Base
Indenture"), between NFLP and The Bank of New York, as trustee, as in effect on
the date hereof and as such Schedule 1 may be amended, supplemented or modified
from time to time in accordance with the terms of the Base Indenture (the
"Definitions List").
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Section 1.2. Accounting and Financial Determinations. Where the character
or amount of any asset or liability or item of income or expense is required to
be determined, or any accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall be made, to
the extent applicable and except as otherwise specified in this Agreement, in
accordance with GAAP. When used herein, the term "financial statement" shall
include the notes and schedules thereto.
Section 1.3. Cross References: Headings. The words "hereof", "herein" and
"hereunder" and words of a similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Annex, Section, Schedule and Exhibit references contained in this
Agreement are references to Annexes, 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:
(a) the singular includes the plural and vice versa;
(b) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to any Person in a particular
capacity only refers to such Person in such capacity;
(c) reference to any gender includes the other gender
(d) reference to any Requirement of Law means such Requirement of Law
as amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time;
(e) "including" (and, with correlative meaning, Include) means
including without limiting the generality of any description preceding such
term;
(f) "or" is not exclusive;
(g) provisions apply to successive events and transactions; and
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(h) with respect to the determination of any period of time, "from" means
"from and including' and "to" means "to but excluding".
SECTION 2. GENERAL AGREEMENT. (a) As specified in the Lease Annexes, the
Lessee and the Lessor intend that this Agreement be (i) an operating lease with
respect to the Acquired Vehicles and (ii) a financing arrangement with respect
to the Financed Vehicles.
(b) If, notwithstanding the intent of the parties to this Agreement, this
Agreement is deemed by any court, tribunal, arbitrator or other adjudicative
authority in any proceeding (each, a "Court") to constitute a financing
arrangement or otherwise not to constitute a "true lease" with respect to the
Acquired Vehicles, then it is the intention of the parties that this Agreement
together with the Master Collateral Agency Agreement, as such agreements apply
to the Acquired Vehicles, shall constitute a security agreement under applicable
law. It is also the intention of the parties that this Agreement together with
the Master Collateral Agency Agreement, as such agreements apply to the Financed
Vehicles, shall in all events constitute a security agreement under applicable
law. The Lessee hereby acknowledges that it has granted to the Master Collateral
Agent, pursuant to the Master Collateral Agency Agreement, for the benefit of
the Trustee, a first priority security interest in all of the Lessee's right,
title and interest in and to the National Master Collateral (as defined therein)
as collateral security for the prompt and complete payment and performance when
due (whether at stated maturity, by acceleration or otherwise) of all of the
obligations and liabilities of the Lessee to the Lessor and the Trustee, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including interest accruing after the Lease
Expiration Date and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding), which may arise under, out of, or in connection with, this
Agreement and any other document made, delivered or given in connection
herewith, whether on account of rent, principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees and
disbursements of counsel to the Lessor or the Trustee that are required to be
paid by the Lessee pursuant to the terms hereof).
Section 2.1. Leasing of Vehicles. From time to time, subject to the terms
and conditions hereof, the Lessor agrees to lease to the Lessee and the Lessee
agrees to lease from the Lessor the Refinanced Vehicles and each additional
Acquired Vehicle or Financed Vehicle identified in vehicle order summaries
(each, a "Vehicle Order") produced from time to time by the Lessee, listing
Vehicles ordered by the Lessee from Eligible
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Manufacturers, for itself or as agent for the Lessor, pursuant to the terms of
any applicable Manufacturer Programs or otherwise. The Lessor shall, subject to
Section 4 and to compliance with the terms of the Indenture, make available to
the Lessee under this Lease, financing for Financed Vehicles (other than Texas
Vehicles) in an aggregate amount, and Acquired Vehicles and Texas Vehicles for
lease to the Lessee hereunder in an aggregate Net Book Value, which collectively
shall not exceed the Maximum Lease Commitment. The Lessee shall make available
to the Lessor (a) a schedule as set forth in Attachment A-1 hereto containing
information concerning the Refinanced Vehicles of a scope agreed upon by the
Lessor and the Lessee, and (b), if requested by the Lessor, each Vehicle Order,
together with a schedule containing the information with respect to the Vehicles
included within such Vehicle Order as is set forth in Attachment A-2 hereto, or
in such form as is otherwise requested by the Lessor (each, a "Vehicle
Acquisition Schedule"). In addition, the Lessee shall provide such other
information regarding such Vehicles as the Lessor may reasonably require from
time to time. The Lessor shall lease to the Lessee, and the Lessee shall lease
from the Lessor, only Vehicles that are Eligible Vehicles. This Agreement,
together with the Manufacturer Programs and any other related documents attached
to this Agreement or submitted with a Vehicle Order (collectively, the
'Supplemental Documents"), will constitute the entire agreement regarding the
leasing of Vehicles by the Lessor to the Lessee.
Section 2.2. Right of Lessee to Act as Lessor's Agent. The Lessor agrees
that the Lessee may act as the Lessor's agent in placing Vehicle Orders on
behalf of the Lessor, as well as filing claims on behalf of the Lessor for
damage in transit, and other Manufacturer delivery claims related to the
Vehicles leased hereunder; provided, however, that the Lessor may hold the
Lessee liable for losses due to the Lessee's actions in performing as the
Lessor's agent hereunder. In addition, the Lessor agrees that the Lessee may
make arrangements for delivery of Vehicles to a location selected by the Lessee
at the Lessee's expense to the extent that any such expense has not been
included in the Capitalized Cost of such Vehicle. The Lessee or the applicable
Sublessee may accept or reject Eligible Vehicles upon delivery in accordance
with the Lessee's or such Sublessee's customary business practices, and any
Eligible Vehicle, if rejected, will be deemed a Casualty hereunder to the extent
the Capitalized Cost thereof has been paid by the Lessor or the Lessee. The
Lessee, acting as agent for the Lessor, shall be responsible for pursuing any
rights of the Lessor with respect to the return of any Eligible Vehicle to the
Manufacturer thereof pursuant to the preceding sentence. The Lessee agrees that
any Vehicles ordered by Lessee on behalf of the Lessor pursuant to this Section
2,2 shall be ordered utilizing the procedures consistent with the applicable
Manufacturer Program or any guidelines of the
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Manufacturer for the ordering or purchasing of Non-Program Vehicles, in each
case as and to the extent applicable.
Section 2.3. Payment of Purchase Price by Lessor: Certain Additional
Payments to the Servicer. (a) Upon receipt of the Manufacturer's invoice and
certificate of origin in respect of any Vehicle other than a Replacement
Vehicle, the Lessor or its agent shall pay or cause to be paid to the dealer or
the related Manufacturer in accordance with such Manufacturer's payment terms,
as applicable, the Capitalized Cost of such Vehicle under the applicable
Manufacturer Program (in the case of a Program Vehicle) or otherwise (in the
case of a Non-Program Vehicle) as established by the invoice of the dealer or
the Manufacturer, as the case may be and the Lessee shall pay all applicable
costs and expenses of freight, packing, handling, storage, shipment and delivery
of such Vehicle to the extent that the same have not been included within the
Capitalized Cost; provided, however, that to the extent a Qualified Intermediary
purchases a Replacement Vehicle on behalf of the Lessee or the Lessor, such
Qualified Intermediary shall pay the Capitalized Cost of such Replacement
Vehicle with funds other than amounts on deposit in the Collection Account or
any subaccount thereof; provided further, however, that solely in the case of
the Refinanced Vehicles, the Lessor shall pay to the Master Collateral Agent on
the Lease Commencement Date, for allocation to National Fleet Funding
Corporation as a Financing Source, an amount equal to the aggregate Net Book
Value as of the Lease Commencement Date of the Refinanced Vehicles.
(b) All amounts paid by the Manufacturer on account of vehicle preparation
services or work covered by warranty performed by National with respect to
Vehicles acquired or financed pursuant to this Agreement or as incentive
payments for maintaining a particular fleet mix shall inure to the benefit of
National and, to the extent any such payments are received by the Lessor, the
Trustee or the Master Collateral Agent, shall promptly be paid over to National.
Section 2.4. Non-liability of Lessor. The Lessor shall not be liable to the
Lessee for any failure or delay in obtaining Vehicles or making delivery
thereof. AS BETWEEN THE LESSOR AND THE LESSEE, ACCEPTANCE FOR LEASE OF THE
VEHICLES SHALL CONSTITUTE THE LESSEE'S ACKNOWLEDGMENT AND AGREEMENT THAT THE
LESSEE HAS FULLY INSPECTED SUCH VEHICLES, THAT THE VEHICLES ARE IN GOOD ORDER
AND CONDITION AND ARE OF THE MANUFACTURE, DESIGN, SPECIFICATIONS AND CAPACITY
SELECTED BY THE LESSEE, THAT THE LESSEE IS SATISFIED THAT THE SAME ARE SUITABLE
FOR THIS USE AND THAT THE LESSOR IS NOT A MANUFACTURER, AN AGENT OF THE
MANUFACTURER OR OTHERWISE ENGAGED IN THE SALE OR DISTRIBUTION OF VEHICLES, AND
HAS NOT MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATION, WARRANTY OR COVENANT,
EXPRESS OR IMPLIED, WITH
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RESPECT TO MERCHANTABILITY, CONDITION, QUALITY, CAPABILITY, WORKMANSHIP,
DURABILITY OR SUITABILITY OF THE VEHICLE IN ANY RESPECT OR IN CONNECTION WITH OR
FOR THE PURPOSES OR USES OF THE LESSEE, OR ANY WARRANTY THAT THE LEASED VEHICLES
WILL SATISFY THE REQUIREMENTS OF ANY LAW OR ANY CONTRACT SPECIFICATION, OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO AND AS BETWEEN THE LESSOR AND THE LESSEE, THE
LESSEE AGREES TO BEAR ALL SUCH RISKS AT ITS SOLE COST AND EXPENSE. THE LESSEE
SPECIFICALLY WAIVES ALL RIGHTS TO MAKE CLAIMS AGAINST THE LESSOR AND ANY LEASED
VEHICLE FOR BREACH OF ANY WARRANTY OF ANY KIND WHATSOEVER AND, AS TO THE LESSOR,
THE LESSEE LEASES THE LEASED VEHICLES "AS IS." The Lessor shall not be liable
for any failure or delay in delivering any Vehicle ordered for lease pursuant to
this Agreement, or for any failure to perform any provision hereof, resulting
from fire or other casualty, natural disaster, riot, strike or other labor
difficulty, governmental regulation or restriction, or any cause beyond the
Lessor's direct control. IN NO EVENT SHALL THE LESSOR BE LIABLE FOR ANY
INCONVENIENCES, LOSS OF PROFITS OR ANY OTHER CONSEQUENTIAL, INCIDENTAL OR
SPECIAL DAMAGES, WHATSOEVER OR HOWSOEVER CAUSED, WHETHER RESULTING FROM ANY
DEFECT IN OR ANY THEFT, DAMAGE, LOSS OR FAILURE OF ANY VEHICLE, OR OTHERWISE,
AND THERE SHALL BE NO ABATEMENT OF RENT BECAUSE OF THE SAME.
SECTION 3. TERM.
Section 3.1. Vehicle Lease Commencement Date. The "Vehicle Lease
Commencement Date" shall mean, (i) for each Refinanced Vehicle, the Closing Date
for the first Series of Notes issued under the Indenture, and (ii) for each
other Vehicle, the date referenced in the Vehicle Acquisition Schedule with
respect to such Vehicle, which in no event shall be later than the date that
funds are expended by the Lessor to acquire or finance the acquisition of such
Vehicle. A vehicle shall be deemed hereunder to be a Vehicle leased under the
Lease on each day during the period (the "Vehicle Term") from and including the
Vehicle Lease Commencement Date to but excluding the Vehicle Lease Expiration
Date.
Section 3.2. Lease Commencement Date. The "Lease Commencement Date" shall
mean the Closing Date for the first Series of Notes issued under the Indenture.
The "Lease Expiration Date" shall mean the later of (i) the date of the payment
in full of all Series of Notes and all outstanding Carrying Charges and (ii) the
Vehicle Lease Expiration Date for the last Vehicle subject to lease by the
Lessee hereunder. The "Term" of this Agreement shall mean the period commencing
on the Lease Commencement Date and ending on the Lease Expiration Date.
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SECTION 4. CONDITIONS PRECEDENT. The agreement of the Lessor to make
available any Acquired Vehicle for lease to the Lessee, and to make available
Texas Vehicles or financing for the acquisition of any other Financed Vehicle
(other than Refinanced Vehicles) for lease to the Lessee upon the Lessee's
placement of a Vehicle Order, for itself or as agent of the Lessor, is subject
to the terms and conditions of the Indenture and subject to the satisfaction of
the conditions to effectiveness specified in Section 34 and the following
conditions precedent as of the Vehicle Lease Commencement Date for such Vehicle:
Section 4.1. No Default. No Potential Lease Event of Default or Lease Event
of Default shall have occurred and be continuing on such date or would result
from the making of such lease.
Section 4.2. Texas Vehicles. The aggregate Net Book Value of Texas Vehicles
on the Lease Commencement Date for any Vehicle shall not exceed 12.5` of the
aggregate Net Book Value of all Vehicles financed under the Lease on such day.
Section 4.3. Other Conditions. The leasing of such Vehicle shall not be
prohibited by the provisions of any Supplement other than a Supplement
establishing a Segregated Series.
SECTION 5. RENT AND CHARGES. The Lessee will pay Rent and certain other
charges on a monthly basis as set forth in this Section 5:
Section 5.1. Payment of Rent. On each Payment Date, the Lessee shall pay to
the Lessor the aggregate of all Rent payable on such Payment Date with respect
to the Vehicles, as provided in the related Lease Annexes.
Section 5.2. Payment of Availability Payment. On each Payment Date, the
Lessee shall pay to the Lessor an amount (the unavailability Payment") in
respect of the unutilized portion of the Maximum Lease Commitment. "Availability
Payment" with respect to each Payment Date shall equal (a) the aggregate
interest due on the Outstanding Notes of all Series as of such Payment Date,
plus (b) an amount equal to all Carrying Charges for the Related Month, less (c)
the sum of (i) any Monthly Variable Rent due on such Payment Date, (ii) any
Monthly Finance Rent due on such Payment Date, and (iii) any earnings on
Permitted Investments (less any portion thereof allocated to the Retained
Interestholder) accruing through the Determination Date occurring prior to such
Payment Date and not included in the calculation of Availability Payments with
respect to any prior Payment Date.
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Section 5.3. Payment of Monthly Supplemental Payment. On each Payment Date,
the Lessee shall pay to the Lessor the Monthly Supplemental Payment that has
accrued during the Related Month with respect to the Financed Vehicles, as
provided in Sections 6 and 7 of Annex B.
Section 5.4. Payment of Termination Payments. Casualty Payments. and Late
Return Payments. On each Payment Date, the Lessee shall pay to the Lessor all
Casualty Payments, Termination Payments and Late Return Payments that have
accrued with respect to the Acquired Vehicles, as provided in, respectively,
Sections 7. 12.3 and 13.
Section 5.5. Late Payment. In the event the Lessee fails to remit payment
of any amount due under the Lease on or before the Payment Date, the amount not
paid will be considered delinquent and the Lessee will pay a late charge equal
to the product of (a) the VFR plus It, times (b) the delinquent amount for the
period from the Payment Date to the date on which such delinquent amount is
received by the Trustee, multiplied by (c) the actual number of days elapsed
during such period divided by 360.
SECTION 6. Reserved.
SECTION 7. CASUALTY OBLIGATION. If a Vehicle becomes a Casualty, then the
Lessee shall (a) promptly notify the Lessor of such occurrence, and (b) in the
case of an Acquired Vehicle, on the Payment Date next succeeding the last day of
the Related Month in which the Lessee obtained actual knowledge that such
Vehicle has become a Casualty, pay to the Lessor an amount (a "Casualty
Payment") equal to the Net Book Value of such Vehicle, calculated as of the
first day of the Related Month in which the Lessee obtained actual knowledge
that such Vehicle became a Casualty (net of Monthly Base Rent and Monthly
Supplemental Payments made in respect of such Vehicle during such Related
Month). Upon payment by the Lessee to the Lessor in accordance herewith of the
Casualty Payment for any Acquired Vehicle that has become a Casualty, (i) the
Lessor, upon request of the Lessee, shall cause title to such Vehicle to be
transferred to the Lessee to facilitate liquidation of such Vehicle by the
Lessee, (ii) the Lessee shall be entitled to any physical damage insurance
proceeds applicable to such Acquired Vehicle (if at such time the Lessee carries
such insurance coverage), and (iii) the Lien of the Master Collateral Agent on
such Vehicle shall automatically be released thereby.
SECTION 8. VEHICLE USE. The Lessee shall use Vehicles leased hereunder
solely for the Lessee's domestic daily rental car operations; provided that the
Lessee may, from time to time, sublease Vehicles to Eligible Franchisees
pursuant to Lessee
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Agreements, including Subleases, used in the ordinary course of the Lessee's
business and such Eligible Franchisees shall rent Vehicles subleased by it to
consumers in the ordinary course of such Eligible Franchisee's domestic daily
rental car operations (provided further, however, that the aggregate Net Book
Value of all Vehicles subject to Subleases on any day shall not exceed an amount
equal to (a) 5` of the aggregate Net Book Value of all Vehicles leased under the
Lease on such day, or (b) such greater amount as each Rating Agency shall have
confirmed in writing will not result in the reduction or withdrawal of the then
current rating of any outstanding Series of Notes). Notwithstanding any such
Lessee Agreement, the Lessee shall remain fully liable for its obligations under
this Agreement and the other Related Documents (including any obligation
hereunder or thereunder that it may cause any Eligible Franchisee to perform or
fulfill). The Lessee shall promptly and duly execute, deliver, file and record
all such documents, statements, filings and registrations, and take such further
actions as the Lessor, the Master Collateral Agent, the Servicer or the Trustee
shall from time to time reasonably request in order to establish, perfect and
maintain the Lessor's title to and interest in the Acquired Vehicles and the
related Certificates of Title as against the Lessee or any third party in any
applicable jurisdiction and to establish, perfect and maintain the Master
Collateral Agent's lien on the Vehicles as noted on the related Certificates of
Title (other than recordation of the Lien of the Master Collateral Agent on the
Certificates of Title for the Initial Vehicles) as a perfected first-priority
lien in any applicable jurisdiction. The Lessee may, at the Lessee's sole
expense, change the place of principal location of any Vehicles. Within 60 days
after any such change of location, the Lessee shall take all actions necessary
(i) to maintain the perfected first-priority Lien of the Master Collateral Agent
on such Vehicles as noted on the Certificates of Title with respect to such
Vehicles (other than recordation of the Lien of the Master Collateral Agent on
the Certificates of Title for the Initial Vehicles) and the Lessor shall
cooperate to the extent required for the Lessee to do so, and (ii) to meet all
material legal requirements applicable to such Vehicles. Following a Lease Event
of Default or Manufacturer Event of Default, and upon the Lessor's request, the
Lessee shall advise the Lessor in writing where all Vehicles leased hereunder as
of such date are principally located. The Lessee shall not knowingly use any
Vehicles, or knowingly permit the same to be used, for any unlawful purpose. The
Lessee shall and shall require the Franchisees to use reasonable precautions to
prevent loss or damage to Vehicles. The Lessee shall or shall cause the
Franchisees to comply in all material respects with all applicable statutes,
decrees, ordinances and regulations regarding acquiring, titling, registering,
leasing, insuring and disposing of Vehicles and shall and shall require the
Franchisees to take reasonable steps to ensure that operators are licensed.
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The Lessee shall or shall cause the Franchisees to perform, at their own
expense, such vehicle preparation and conditioning services with respect to
Vehicles as are customary. The Lessor, the Master Collateral Agent or the
Trustee or any authorized representative of the Lessor, the Master Collateral
Agent or the Trustee may during reasonable business hours from time to time,
upon reasonable prior notice, without disruption of the Lessee's or the
Franchisees' business and subject to applicable law, inspect Vehicles and
registration certificates, Certificates of Title and related documents covering
Vehicles wherever the same be located.
SECTION 9. REGISTRATION: LICENSE: TRAFFIC SUMMONSES: PENALTIES AND FINES.
The Lessee, at its expense, shall be responsible for proper registration and
licensing of Vehicles, and titling of Vehicles in the name of the Lessor (in the
case of Acquired Vehicles and Texas Vehicles) or the Lessee (in the case of all
other Financed Vehicles), in each case (other than with respect to the Initial
Vehicles) with the Lien of the Master Collateral Agent noted thereon, and where
required, the Lessee shall or shall cause the Franchisees to have Vehicles
inspected by any appropriate governmental authority; provided, however, that
notwithstanding the foregoing, unless a Liquidation Event of Default or Limited
Liquidation Event of Default shall have occurred and be continuing, possession
of all Certificates of Title shall remain with the Servicer. The Lessee shall
pay or cause to be paid all registration fees, title fees, license fees, traffic
summonses, penalties, judgments and fines incurred with respect to any Vehicle
during the Vehicle Term for such Vehicle or imposed during the Vehicle Term for
such Vehicle by any governmental authority or any court of law or equity with
respect to Vehicles in connection with the Lessee's operation of Vehicles, and
any such amounts paid by the Lessor on the Lessee's behalf, in its discretion
upon at least 15 days' prior notice to the Lessee, will be reimbursed within
thirty (30) days of the Lessor notifying the Lessee of such payment; provided,
however, that the Lessor shall not pay on the Lessee's behalf any traffic
summons, or any penalty, judgment or fine for so long as such amount is being
contested by the Lessee in good faith and by appropriate proceedings with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP and provided that the Lessee has agreed in
writing to indemnify and hold the Lessor harmless from and against all loss,
liability and expense arising out of such unpaid amounts (and, in any case, for
so long as forfeiture of any Vehicles or other Master Collateral will not result
from the failure to pay any such amounts). The Lessor agrees to execute a power
of attorney substantially in the form of Attachment B hereto (a "Power of
Attorney"), and such other documents as may be necessary in order to allow the
Lessee to title, register and dispose of the Acquired Vehicles and the Texas
Vehicles; and the Lessee
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acknowledges and agrees that with respect to the Acquired Vehicles, it has no
right, title or interest in or with respect to any Certificate of Title.
Notwithstanding anything herein to the contrary, the Lessor may terminate such
Power of Attorney as provided in Section 17.3.
SECTION 10. MAINTENANCE AND REPAIRS. The Lessee shall or shall cause the
Franchisees to pay for all maintenance and repairs to keep Vehicles in good
working order and condition, and shall or shall cause the Franchisees to
maintain Vehicles as required in order to keep the Manufacturer's warranty in
force. The Lessee shall or shall cause the Franchisees to return each Vehicle to
an authorized Manufacturer facility or the applicable Manufacturer's authorized
warranty station (which may be a facility of the Lessee) for warranty work. The
Lessee shall or shall cause the Franchisees to comply with any Manufacturer's
recall of any Vehicle. The Lessee shall or shall cause the Franchisees to pay,
or cause to be paid, all usual and routine expenses incurred in the use and
operation of Vehicles including, but not limited to, fuel, lubricants, and
coolants. The Lessor, upon thirty (30) days' prior notice to the Lessee
(including any failure by a Franchisee to pay any such expenses), may pay any
such expenses that have not otherwise been paid by, or on behalf of, the Lessee,
and any expenses incurred by the Lessor on the Lessee's behalf for maintenance,
repair, operation or use by the Lessee of Vehicles will promptly be reimbursed
(in any event no later than the next Payment Date following such payment) by the
Lessee to the Lessor in the amount paid by the Lessor. The Lessee shall not,
without the prior consent of the Lessor, make any material alterations to any
Program Vehicle which would result in a reduction of the Repurchase Price for
such Vehicle or any material alterations to any Non-Program Vehicle. Any
improvements or additions to an Acquired Vehicle shall become and remain the
property of the Lessor, except that any addition or improvement to such a
Vehicle made by the Lessee shall remain the property of the Lessee if it can be
disconnected or removed from the Vehicle without impairing the functioning of or
resale value thereof, other than any function or value provided by such addition
or improvement.
SECTION 11. VEHICLE WARRANTIES. If a Vehicle is covered by a Manufacturer's
warranty, the Lessee, during the Vehicle Term, shall have the right to make any
claims under such warranty which the Lessor could make and to receive related
proceeds directly. As provided in Section 2.4, the Lessor makes no warranty or
representation whatsoever, express or implied, with respect to any Vehicle.
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SECTION 12. PROGRAM VEHICLE USAGE REQUIREMENTS AND DISPOSITION.
Section 12.1. Usage. As used herein, the term "vehicle turn-in condition"
with respect to each Program Vehicle means a set of criteria for evaluating
Program Vehicles upon their delivery at the end of the applicable Vehicle Terms,
which criteria will be determined in accordance with the related Manufacturer
Program. Program Vehicles not meeting the applicable Manufacturer Program's
vehicle turn-in condition requirements will, unless redesignated as a
Non-Program Vehicle in accordance with Section 14, be purchased by the Lessee in
accordance with the Casualty procedure set forth in Section 7 or otherwise
disposed of in accordance with the late delivery procedure set forth in Section
13, as applicable.
Section 12.2. Disposition Procedure: Sale of Program Vehicles Outside of
Manufacturer Program. (a) Except as otherwise permitted pursuant to subsection
(b) below, prior to the end of the Vehicle Term, the Lessee will or will cause
the related Franchisee to deliver each Program Vehicle (other than a Casualty)
to the nearest related Manufacturer official auction or other facility
designated by such Manufacturer at the Lessee's sole expense and in accordance
with the terms of the applicable Manufacturer Program. Any transportation
allowance (for delivery costs) and any rebates or credits applicable to the
unexpired term of any license plates for a Vehicle shall inure to the benefit of
the Lessee and, to the extent received by the Lessor, the Trustee or the Master
Collateral Agent, shall promptly be paid over to the Lessee. The Lessee will
comply with the requirements of law and the requirements of the Manufacturer
Programs in connection with, among other things, the delivery of Certificates of
Title, documents of transfer signed as necessary, signed Condition Reports, and
signed odometer statements for the Program Vehicles.
(b) At the election of any of the Servicer, the Lessee or the Lessor,
Program Vehicles may be sold during the Repurchase Period in a sale which is not
made pursuant to the related Manufacturer Program only (i) if such Program
Vehicle is a Financed Vehicle and the Lessee has theretofore paid to the Lessor
an amount equal to the Net Book Value of such Program Vehicle (plus all unpaid
Rent and Monthly Supplemental Payments in respect of such Vehicle) or (ii) the
purchase price (including any amounts paid by the Manufacturer as an incentive
for selling such Vehicle outside of the related Manufacturer Program), net of
all fees and expenses incurred in connection with such sale, exceed the Net Book
Value of such Vehicle less reasonably predictable Excess Mileage Charges, Excess
Damage Charges, Missing Equipment Charges and other similar charges imposed by
the Manufacturer.
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Section 12.3. Termination Payments. On the Payment Date next succeeding the
earlier of (a) the last day of the Related Month in which the Repurchase Price
with respect to any Acquired Vehicle that is a Program Vehicle is received by
the Lessor, the Master Collateral Agent or the Trustee (including by deposit
into the Collection Account or the Master Collateral Account) and (b) the
thirtieth (30th) day after the expiration of the Repurchase Period for such
Acquired Vehicle, the Lessee shall pay to the Lessor in respect of such Acquired
Vehicle any Excess Damage Charges, Excess Mileage Charges, Missing Equipment
Charges, early turnback surcharges and any other similar charges and penalties
(collectively, a "Program Vehicle Termination Payment") as determined by the
Manufacturer or its agent in accordance with the applicable Manufacturer Program
and on the Payment Date next succeeding the earlier of (i) the last day of the
Related Month in which Disposition Proceeds from the sale or other disposition
of an Acquired Vehicle that is a Non-Program Vehicle, but is not a Casualty, are
received by the Lessor, the Master Collateral Agent or the Trustee (including by
deposit into the Collection Account or the Master Collateral Account), and (ii)
the thirtieth (30th) day after the date which is eighteen (18) months after the
date of the original dealer invoice for such Vehicle sold as a new vehicle, the
Lessee shall pay to the Lessor in respect of such Vehicle an amount (a
"Non-Program Vehicle Termination Payment") equal to the quotient of (x) the sum
of all Program Vehicle Termination Payments for the Related Month, divided by
(y) the number of Acquired Vehicles that were Program Vehicles and with respect
to which, during the Related Month, either the Repurchase Price was received or
there occurred the 30th day after the expiration of the Repurchase Period
(Program Vehicle Termination Payments and Non-Program Vehicle Termination
Payments collectively, "Termination Payments"). The provisions of this Section
12.3 will survive the expiration or earlier termination of the Term.
SECTION 13. LATE RETURN PAYMENTS. If an Acquired Vehicle which is a Program
Vehicle is not returned to the Manufacturer or sold at Auction prior to the
expiration of the Repurchase Period for- such Vehicle in accordance with Section
12.2, the Lessee shall, unless such Vehicle has been redesignated as a
Non-Program Vehicle in accordance with Section 14, (a) promptly notify the
Lessor of its failure to return such Vehicle to the Manufacturer or to sell such
Vehicle at Auction during the Repurchase Period therefor, (b) use commercially
reasonable efforts to sell or otherwise dispose of such Vehicle in a manner
reasonably likely to maximize proceeds from such disposition and consistent with
industry practice, (c) cause the Disposition Proceeds, if any, from any such
sale or disposition to be paid to the Master Collateral Agent, in accordance
with paragraph 10(d) of Annex A, and (d) on the Payment Date next succeeding the
earlier of (i) the last day of the Related Month in which such Disposition
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Proceeds are received by the Lessor, the Master Collateral Agent or the Trustee
(including by deposit into the Collection Account or the Master Collateral
Account), and (ii) the thirtieth (30th) day after the expiration of the
Repurchase Period for such Vehicle, pay to the Lessor an amount (a "Late Return
Payment") equal to the excess of (x) the Net Book Value of such Vehicle,
calculated as of the first day of the calendar month in which such Repurchase
Period expired, over (y) the sum of (A) the dollar amount of such Disposition
Proceeds plus (B) any Monthly Base Rent paid by the Lessee with respect to such
Vehicle in any calendar month after the calendar month in which such Repurchase
Period expired (which dollar amount may be equal to, but not less than, zero
dollars).
SECTION 14. REDESIGNATION OF VEHICLES. At any time, including upon the
occurrence of a Manufacturer Event of Default with respect to the Manufacturer
of any Program Vehicle or a Program Vehicle's becoming ineligible for repurchase
by its Manufacturer or for sale at Auction under the applicable Manufacturer
Program, due to physical damage, repair charges or accrued mileage, in each case
in excess of that permitted under the related Manufacturer Program, or due to
any failure or inability to return the Vehicle to the Manufacturer or the
designated Auction prior to the expiration of the Repurchase Period, or due to
any other event or circumstance, the Servicer may designate the related Vehicle
as a Non-Program Vehicle if such Vehicle, as a Non-Program Vehicle, will be an
Eligible Vehicle, provided that no Amortization Event or Potential Amortization
Event has occurred and is continuing and provided further that no violation of
the requirements of Section 25.5 has occurred and is continuing or would be
caused by such redesignation and no failure or violation of any other condition,
requirement, or restriction specified in any related Series Supplement would be
caused by such redesignation (subject to the right of the Noteholders holding
the requisite Invested Amount of each applicable Series of Notes to waive such
violation, in each case as and to the extent permitted under the related Series
Supplement); provided, in each case, that (x) any additional Monthly Base Rent
due with respect to each such Vehicle, relating to the decrease, if any, of the
Net Book Value of such Vehicle under the newly applicable Depreciation Schedule,
shall be paid on the next succeeding Payment Date, and (y) the minimum level of
Enhancement required under the applicable Series Supplement, after giving effect
to such designation, shall be satisfied on the date of designation.
SECTION 15. GENERAL INDEMNITY.
Section 15.1. Indemnity of the Lessor. The Lessee agrees to indemnify and
hold harmless the Lessor and the Lessor's directors, officers, agents and
employees (collectively, together
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with the Persons subject to indemnity under Section 15.2, the "Indemnified
Persons") against any and all claims, demands and liabilities of whatsoever
nature, and all costs and expenses, relating co or in any way arising out of:
Section 15.1.1. the ordering, delivery, acquisition, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, re-registration, custody by the Lessee of title and
registration documents, use, nonuse, misuse, operation, deficiency, defect,
transportation, repair, control or disposition of any Vehicle leased
hereunder or to be leased hereunder, including, without limitation, any
such Vehicle subleased to a Franchisee. The foregoing shall include,
without limitation, any liability (or any alleged liability) of the Lessor
to any third party arising out of any of the foregoing, including, without
limitation, all legal fees, costs and disbursements arising out of such
liability (or alleged liability);
Section 15.1.2. all (i) federal, state, county, municipal, foreign or
other fees and taxes of whatsoever nature other than income taxes,
including but not limited to license, qualification, registration,
franchise, sales, use, gross receipts, ad valorem, business, property (real
or personal), excise, motor vehicle, and occupation fees and taxes, with
respect to any Vehicle or the acquisition, purchase, sale, lease, sublease,
rental, use, operation, control, ownership or disposition of any Vehicle by
any Person or measured in any way by the value thereof or by the business
of, investment by, or ownership by the Lessor or the Lessee with respect
thereto, (ii) all federal, state, local and foreign income taxes and
penalties and interest thereon, whether assessed, levied against or payable
by the Lessor or otherwise as a result of its being a member of any group
of corporations including the Lessee that file any tax returns on a
consolidated or combined basis, and (iii) documentary, stamp, filing,
recording, mortgage or other taxes, if any, which may be payable by the
Lessor or the Lessee in connection with this Agreement, the other Related
Documents or the Lessee Agreements and any penalties or interest with
respect thereto;
Section 15.1.3. any violation by the Lessee of this Agreement or of
any Related Documents or Lessee Agreements to which the Lessee is a party
or by which it is bound or any laws, rules, regulations, orders, writs,
injunctions, decrees, consents, approvals, exemptions, authorizations,
licenses and withholdings of objection of any governmental or public body
or authority and all other requirements having the force of law applicable
at any time to any
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Vehicle or any action or transaction by the Lessee with respect thereto or
pursuant to this Agreement;
Section 15.1.4. all reasonable out of pocket costs and expenses of the
Lessor (including the reasonable fees and disbursements of counsel for the
Lessor) in connection with the preparation, execution, delivery and
performance of this Agreement and the other Related Documents, including,
without limitation, any and all fees of the Trustee, Paying Agent, Clearing
Agencies and Master Collateral Agent, all fees payable in connection with
any Enhancement, any and all fees payable to Rating Agencies and any
underwriting or placement agency fees incurred in connection with the sale
of the Notes;
Section 15.1.5. all reasonable out of pocket costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Lessor and the Master Collateral Agent, the Trustee or the Noteholders in
connection with the administration, enforcement, waiver or amendment of
this Agreement and any other Related Documents, and all indemnification
obligations of the Lessor under the Related Documents; and
Notwithstanding the foregoing, the Lessee shall have no duty to indemnify
any Indemnified Person for any claims, demands, liabilities, costs, or expenses
to the extent such claim, demand, liability, cost or expense arises out of or is
due to such Person's negligence or willful misconduct.
Section 15.2. Indemnification of the Trustee. The Lessee agrees to
indemnify and hold harmless the Trustee (and its officers, directors, employees
and agents) from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of, or arising out of or in connection with: (i)
any acts or omissions of the Lessee 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, the Lessee 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. Any such indemnification shall not be payable from the assets of
NFLP. The provisions of this indemnity shall run directly to and be enforceable
by the Trustee or any other Indemnified Person subject to the limitations
hereof. The indemnification provided for in this Section 15.2 shall be
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addition to any other indemnities available to the Trustee and shall survive the
termination of the duties of the Lessee hereunder and the termination of this
Agreement or a document to which the Trustee is a signatory or the resignation
or removal of the Trustee.
Section 15.3. Reimbursement Obligation by the Lessee. The Lessee shall
forthwith upon demand reimburse the Lessor or the Trustee, as the case may be,
for any sum or sums expended with respect to any of the foregoing, or shall pay
such amounts directly upon request from the Lessor or the Trustee; provided,
however, that, if so requested by the Lessee, the Lessor or the Trustee shall
submit to the Lessee a statement documenting any such demand for reimbursement
or prepayment. To the extent that the Lessee in fact indemnifies the Lessor or
the Trustee under the indemnity provisions of this Agreement, the Lessee shall
be subrogated to the rights of the Lessor or the Trustee, as the case may be, in
the affected transaction and shall have a right to determine the settlement of
claims therein. The obligations of the Lessee contained in this Section 15 shall
survive the expiration or earlier termination of this Agreement or any lease of
any Vehicle hereunder; provided, however, that the factual or legal
circumstances giving rise to the Lessor's exposure to liability occur during the
period that the Lease is in effect as to the Vehicle for which such exposure to
liability arose.
Section 15.4. Notice to Lessee of Claims. The Lessor or the Trustee, as the
case may be, shall notify the Lessee in writing (a "Notice of Claim") of the
pendency of any such claim, action or facts referred to in this Section 15 for
which indemnity may be required.
Section 15.5. Defense of Claims. Defense of any claim referred to in this
Section 15 for which indemnity may be required shall, at the option and request
of the Lessee, be conducted by the Lessee. Following receipt of any Notice of
Claim, the Lessee will inform the Indemnified Person of its election to defend
such claim. Such Indemnified Person may participate in any such defense at its
own expense, provided such participation, in the Lessee's reasonable opinion,
does not interfere with the Lessee's defense. The Lessee agrees that no
Indemnified Person will be liable to the Lessee for any claim caused directly or
indirectly by the inadequacy of any Vehicle for any purpose or any deficiency or
defect therein or the use or maintenance thereof or any repairs, servicing or
adjustments thereto or any delay in providing or failure to provide such or any
interruption or loss of service or use thereof or any loss of business, all of
which shall be the risk and responsibility of the Lessee, except to the extent
that any of the foregoing is caused by the gross negligence or willful
misconduct of such Indemnified Person. The rights and indemnities of each
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Indemnified Person hereunder are expressly made for the benefit of, and will be
enforceable by, each Indemnified Person notwithstanding the fact that such
Indemnified Person is not or is no longer a party to (or entitled to receive the
benefits of) this Agreement. This general indemnity shall not affect any claims
of the type discussed above, or otherwise, which the Lessee may have against the
Manufacturer.
SECTION 16. SUCCESSORS AND ASSIGNS: ASSIGNMENT. This Agreement shall be
binding upon the Lessor, the Lessee and their respective successors and assigns,
and shall inure to the benefit of the Lessee, the Lessor, and the Trustee and
the Master Collateral Agent as third party beneficiaries and their respective
successors and assigns; provided, however, that the Lessee shall not have the
right to assign its rights or delegate its duties under this Agreement without
(i) the Lessor'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 any outstanding Series
of Notes as a result thereof; provided, further, however, the Lessee may
sublease certain of the Vehicles under the terms of the Lessee's Subleases to
Eligible Franchisees (subject to the limitations specified in Section 8), and
the Lessee and such Eligible Franchisees may rent such Vehicles to consumers in
the ordinary course of their respective domestic daily rental businesses. Any
purported assignment in violation of this Section 16 shall be void and of no
force or effect. Nothing contained herein shall be deemed to restrict the right
of the Lessee to acquire or dispose of, by purchase, lease, financing, or
otherwise, motor vehicles that are not subject to the provisions of this
Agreement.
SECTION 17. DEFAULT AND REMEDIES THEREFOR.
Section 17.1. Events of Default. Any one or more of the following will
constitute an event of default (a "Lease Event of Default") as that term is used
herein:
Section 17.1.1. the occurrence of (i) a default in the payment of any
Monthly Base Rent, Monthly Variable Rent, Monthly Finance Rent, Termination
Payment, Casualty Payment, Late Return Payment, Monthly Supplemental
Payment or Availability Payment, and the continuance thereof for five (5)
Business Days, or (ii) a default in the payment of any amount payable under
this Agreement (other than amounts described in clause (i) above) and the
continuance thereof for five (5) Business Days;
Section 17.1.2. any unauthorized assignment or transfer of this
Agreement by the Lessee occurs;
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Section 17.1.3. the Lessee fails to comply with or perform any covenant,
condition, agreement or provision of this Agreement (which failure does not
constitute a Lease Event of Default under any of the other provisions of this
Section 17) and the continuance of such failure for 60 days after the earlier of
(i) the date the Lessor, the Master Collateral Agent or the Trustee delivers
written notice thereof to the Lessee and (ii) the date the Lessee obtains actual
knowledge thereof and such failure (to the extent such provision does not
incorporate a materiality limitation in its terms) materially adversely affects
the interests of the Lessor, the Trustee or the Secured Parties;
Section 17.1.4. any representation or warranty made by the Lessee in this
Agreement or any Related Document is incorrect in any respect as of the date
such warranty or representation is made and continues to be incorrect for a
period of 60 days after the earlier of (i) the date on which written notice
thereof shall have been given to the Lessee by the Lessor, the Master Collateral
Agent or the Trustee and (ii) the date on which the Lessee obtains actual
knowledge thereof, and which failure to be correct (to the extent such
representation and warranty does not incorporate a materiality limitation in its
terms) materially adversely affects the interests of the Lessor, the Trustee or
the Secured Parties; or any schedule, certificate, financial statement, report,
notice, or other writing furnished by the Lessee to the Lessor is false or
misleading in any respect on the date as of which the facts therein set forth
are stated or certified, and continues to be incorrect in any respect for a
period of 60 days after the earlier of (a) the date on which written notice
thereof shall have been given to the Lessee by the Lessor, the Master Collateral
Agent or the Trustee and (b) the date on which the Lessee obtains actual
knowledge thereof, and which failure to be correct materially adversely affects
the interests of the Lessor, the Trustee or the Secured Parties;
Section 17.1.5. an Event of Bankruptcy occurs with respect to the Lessee;
Section 17.1.6. all or any portion of any Related Document shall at any
time and for any reason not be in full force and effect or any event shall occur
and be continuing which constitutes an Amortization Event under the Indenture,
and such failure or event materially adversely affects the interests of the
Lessor, the Trustee or the Secured Parties;
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Section 17.1.7. the Pension Benefit Guaranty Corporation or the
Internal Revenue Service shall have filed notice of one or more liens
against the Lessee (unless such lien does not purport to cover the Master
Collateral or any amount payable under this Agreement), and such notice
shall have remained in effect for more than thirty (30) days unless, prior
to the expiration of such period, the Lessee shall have removed such lien
or shall have provided the Lessor with a bond (from a bond provider which
the Rating Agencies shall have approved) in an amount at least equal to the
amount of such liens.
Section 17.2. Effect of Lease Event of Default. (a) If any Lease Event of
Default or Liquidation Event of Default shall occur and be continuing, the
rights of the Lessee to place Vehicle Orders pursuant to this Agreement (but not
otherwise) shall immediately terminate;
(b) If a Lease Event of Default described in Section 17.1.1(i), 17.1.2 or
17.1.5 or a Liquidation Event of Default shall occur, then the Monthly Base
Rent, the Monthly Supplemental Payment, Casualty Payments (in each case
calculated as if all Vehicles had become a Casualty during the Related Month),
the Monthly Variable Rent, the Availability Payment, the Monthly Finance Rent
(in each case calculated as if the full amount of interest, principal and other
charges under all outstanding Series of Notes were then due and payable in
full), Termination Payments and Late Return Payments shall, automatically,
without further action by the Lessor or the Trustee, become immediately due and
payable;
(c) If a Limited Liquidation Event of Default shall occur, then the Monthly
Base Rent, the Monthly Supplemental Payment and Casualty Payments (in each case,
calculated as if each Vehicle with respect to which the Lessor has terminated
the Lessee's right to possession pursuant to Section 17.3(iii) had become a
Casualty during the Related Month) the Monthly Variable Rent, the Availability
Payment and the Monthly Finance Rent (in each case, calculated as if the full
amount of interest, principal and other charges under the applicable Series of
Notes were then due and payable in full), Termination Payments and Late Return
Payments (in each case, with respect to each Vehicle with respect to which the
Lessor has terminated the Lessee's right to possession pursuant to Section
17.3(iii)) shall automatically, without further action by the Lessor or the
Trustee, become immediately due and payable;
(d) If any other Lease Event of Default shall occur, the Lessor or the
Trustee may declare the Rent and all other charges and payments (calculated as
described in paragraph (b) above) to be due and payable, whereupon such Rent and
such other charges
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and payments (as so calculated) shall, subject to Section 17.4, become
immediately due and payable.
Section 17.3. Rights of Lessor Upon Lease Event of Default. Liquidation
Event of Default or Limited Liquidation Event of Default. If a Lease Event of
Default, Liquidation Event of Default or Limited Liquidation Event of Default
shall occur, then the Lessor at its option may:
(i) Only if a Lease Event of Default shall have occurred and be
continuing, proceed by appropriate court action or actions, either at law
or in equity, to enforce performance by the Lessee of the applicable
covenants and terms of this Agreement or to recover damages for the breach
hereof calculated in accordance with Section 17.4; or
(ii) If a Liquidation Event of Default or a Limited Liquidation Event
of Default shall have occurred and be continuing, the Lessor and the
Trustee, to the extent provided in the Indenture, shall have all the rights
against the Lessee and the Collateral provided in the Indenture upon a
Liquidation Event of Default or a Limited Liquidation Event of Default,
including the right to take (under the specified circumstances) possession
of Vehicles (to the extent specified in this Agreement or the Indenture)
immediately; or
(iii) If a Liquidation Event of Default has occurred, by notice in
writing to the Lessee, terminate this Agreement in its entirety and/or the
right of possession hereunder of the Lessee as to the Vehicles, and the
Lessor may direct delivery by the Lessee of documents of title to the
Vehicles, whereupon all rights and interests of the Lessee to the Vehicles
(except as otherwise provided herein) will cease and terminate (but the
Lessee will remain liable hereunder as herein provided, calculated in
accordance with Section 17.4); or, if a Limited Liquidation Event of
Default has occurred, by notice in writing to the Lessee, terminate the
right of possession hereunder of the Lessee as to such number of Vehicles
as will generate proceeds from liquidation in an amount sufficient to pay
all principal of and interest on the related Series of Notes, and the
Lessor may direct delivery by the Lessee of documents of title to such
Vehicles, whereupon all right, title and interest of the Lessee to such
Vehicles (except as otherwise provided herein) will cease and terminate
(but the Lessee will remain liable hereunder as herein provided, calculated
in accordance with Section 17.4); and thereupon, in either such case, the
Lessor or its agents may peaceably enter upon the premises of the Lessee or
other premises where such Vehicles may be located and take possession of
them and thenceforth
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hold, possess and enjoy the same free from any right of the Lessee, or its
successors or assigns, to employ such Vehicles for any purpose whatsoever
consistent with the mitigation of losses and damages, and the Lessor will,
nevertheless, have a right to recover from the Lessee any and all amounts
which under the terms of Section 17.2 (as limited by Section 17.4) of this
Agreement may be then due. The Lessor will provide the Lessee with written
notice of the place and time of any sale of Financed Vehicles pursuant to
this Section 17.3 at least five (5) days prior to the proposed sale, which
notice period shall be deemed commercially reasonable, and the Lessee may
purchase the Vehicle(s) at the sale. Each and every power and remedy hereby
specifically given to the Lessor will be in addition to every other power
and remedy hereby specifically given or now or hereafter existing at law,
in equity or in bankruptcy and each and every power and remedy may be
exercised from time to time and simultaneously and as often and in such
order as may be deemed expedient by the Lessor; provided, however, that the
measure of damages recoverable against the Lessee will in any case be
calculated in accordance with Section 17.4. All such powers and remedies
will be cumulative, and the exercise of one will not be deemed a waiver of
the right to exercise any other or others. No delay or omission of the
Lessor in the exercise of any such power or remedy and no renewal or
extension of any payments due hereunder will impair any such power or
remedy or will be construed to be a waiver of any default or any
acquiescence therein. Any extension of time for payment hereunder or other
indulgence duly granted to the Lessee will not otherwise alter or affect
the Lessor's rights or the obligations hereunder of the Lessee. The
Lessor's acceptance of any payment after it will have become due hereunder
will not be deemed to alter or affect the Lessor's rights hereunder with
respect to any subsequent payments or defaults therein; or
(iv) If the Lessee shall default in the due performance and observance
of any of its obligations under Section 10, 24.4, 24.5, 24.6(iv), 24.9,
25.3 or 25.4 hereof, and such default shall continue unremedied for a
period of 30 days after notice thereof shall have been given to the Lessee
by the Lessor or the Trustee, the Lessor shall have the ability to exercise
all rights, remedies, powers, privileges and claims of the Lessee against
the Manufacturers under or in connection with the Manufacturer Programs
with respect to (i) Vehicles the Lessee has determined to turn back to the
Manufacturers under such Manufacturer Programs and (ii) whether or not the
Lessee shall then have determined to turn back such Vehicles, any
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Vehicles for which the applicable Repurchase Period will end within one
week or less; or
(v) Upon a default in the performance (after giving effect to any
grace periods provided herein) by the Lessee of its obligations under
Section 23.6 or 24.19 hereof with respect to certain Vehicles, the Lessor
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 the Lessee or the Lessor, as
applicable; or
(vi) Upon the occurrence of a Liquidation Event of Default, the
Servicer will return all Program Vehicles to the related Manufacturer and
shall sell all Non-Program Vehicles, in each case, in accordance with the
instructions of the Lessor. Upon the occurrence of a Limited Liquidation
Event of Default, the Servicer will return Program Vehicles to the related
Manufacturer, and shall use commercially reasonable efforts to sell
Non-Program Vehicles, to generate proceeds in an amount sufficient to pay
all interest on and principal of the related Series of Notes, in each case,
in accordance with the instructions of the Lessor. To the extent any
Manufacturer fails to accept any such Vehicles under the terms of the
applicable Manufacturer Program, the Lessor shall have the right to
otherwise dispose of such Vehicles and to direct the Servicer to dispose of
such Vehicles in accordance with its instructions. In addition, the Lessor
shall have all of the rights, remedies, powers, privileges and claims
vis-a-vis the Lessee, necessary or desirable to allow the Trustee to
exercise the rights, remedies, powers, privileges and claims given to the
Trustee pursuant to Sections 9.2 and 2~] of the Base Indenture and the
Lessee acknowledges that it has hereby granted the Lessor all of the
rights, remedies, powers, privileges and claims granted to the Trustee
pursuant to Article 9 of the Base Indenture and that, under certain
circumstances set forth in the Base Indenture, the Trustee may act in lieu
of the Lessor in the exercise of such rights, remedies, powers, privileges
and claims; or
(vii) By notice in writing to the Lessee, terminate the Power of
Attorney (provided, that, after any such termination of the Power of
Attorney, the Lessor will folio; the direction of the Servicer to release
liens on Acquired Vehicles which liens are required to be released under
the terms of this Agreement).
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Section 17.4. Measure of Damages. If a Lease Event of Default occurs and
the Lessor, the Master collateral Agent or the Trustee exercises the remedies
granted to the Lessor, the Master Collateral Agent or the Trustee under this
Section 17 or under Section 9.2 of the Indenture, the amount that the Lessor
shall be permitted to recover shall be equal to:
(i) all Rent and payments under this Agreement (calculated as provided
in Section 17.2); Plus
(ii) any damages and expenses which the Lessor, the Master Collateral
Agent or the Trustee shall have sustained by reason of the Lease Event of
Default, together with reasonable sums for such attorneys' fees and such
expenses as will be expended or incurred in the seizure, storage, rental or
sale of the Vehicles or in the enforcement of any right or privilege
hereunder or in any consultation or action in such connection; plus
(iii) all other amounts due and payable under this Agreement; plus
(iv) interest from time to time on amounts due and unpaid under this
Agreement at the VFR plus 1%, computed from the date of the Lease Event of
Default or the date payments were originally due the Lessor under this
Agreement or from the date of each expenditure by the Lessor which is
recoverable from the Lessee pursuant to this Section 17, as applicable, to
and including the date payments are made by the Lessee; minus
(v) an amount equal to all sums realized by the Lessor, the Master
Collateral Agent and the Trustee from the liquidation of the Financed
Vehicles (other than the Texas Vehicles) leased hereunder (either by
receipt of payment from the Manufacturers under Manufacturer Programs, from
sales of Vehicles to third parties, or otherwise), provided, however, that
if a Financed Vehicle (other than a Texas Vehicle) is delivered to the
Manufacturer or the designated Auction for repurchase by the Manufacturer
or sale at Auction under the applicable Manufacturer Program, and such
Vehicle is accepted for repurchase by such Manufacturer (as evidenced by a
Condition Report indicating that such Vehicle conforms to the requirements
for repurchase under such Manufacturer Program) or is sold by such Auction,
the Lessor and the Trustee shall be deemed to have received, thirty (30)
days after the date of such acceptance or sale, on account of this clause
(v) an amount equal to the Net Book Value of such Vehicle, calculated as of
its Disposition Date (less any Termination Payments payable in respect of
such Vehicle).
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Section 17.5. Application of Proceeds. The proceeds of any sale or other
disposition of any Financed Vehicles pursuant to Section 17.3 shall be applied
in the following order: (i) to the reasonable costs and expenses incurred by the
Lessor in connection with such sale or disposition, including any reasonable
costs associated with repairing such Vehicles, and reasonable attorneys' fees in
connection with the enforcement of this Agreement, (ii) to the payment of
outstanding Rent and payments under the Lease (such proceeds to be applied
first, to outstanding Monthly Variable Rent and Monthly Finance Rent pro rata,
second, to outstanding Availability Payments, third, to outstanding Base Rent
and Monthly Supplemental Payments pro rata, fourth, to outstanding Termination
Payments, Casualty Payments and Late Return Payments pro rata and fifth, to
outstanding late charges pursuant to Sections 5.5 and 17.4(iv), (iii) to the
payment of all other amounts due hereunder and (iv) any remaining proceeds to
the Lessee.
SECTION 18. MANUFACTURER EVENTS OF DEFAULT. Upon the occurrence of a
Manufacturer Event of Default with respect to a Manufacturer, the Lessee on
behalf of the Lessor (a) shall no longer place Vehicle Orders for additional
Program Vehicles from such Manufacturer (each, a "Defaulting Manufacturer") and
(b) shall cancel any Vehicle Order for Program Vehicles of such Defaulting
Manufacturer to which a vehicle identification number (a "VIN") has not been
assigned as of the date such Manufacturer Event of Default occurs (to the extent
such Vehicle Order is cancelable, with or without penalty).
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE. Pursuant to Section
7701 of the Code and as set forth in Attachment C hereto, the Lessee will
warrant and certify that (1) the Lessee intends to use the Acquired Vehicles in
a trade or business of the Lessee, and (2) the Lessee has been advised that it
will not be treated as the owner of the Acquired Vehicles for federal income tax
purposes.
SECTION 20. SURVIVAL. In the event that, during the term of this Agreement,
the Lessee becomes liable for the payment or reimbursement of any obligations,
claims or taxes pursuant to any provision hereof, such liability will continue,
notwithstanding the expiration or termination of this Agreement, until all such
amounts are paid or reimbursed by the Lessee.
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL AGENT AND
TRUSTEE. Notwithstanding anything to the contrary contained in this Agreement,
the Lessee acknowledges that each of the Lessee and the Lessor, pursuant to the
Master Collateral Agency Agreement, has granted a security interest to the
Master Collateral Agent, for the benefit of the Trustee, in all of its right,
title and interest in, to and under the Vehicles, the
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related Manufacturer Programs, the Master Collateral Account and all other
Master Collateral specified in the Master Collateral Agency Agreement as being
pledged by National or NFLP, and further acknowledges that the Lessor, pursuant
to the Indenture, has granted a security interest to the Trustee in all of its
right, title and interest in, to and under the NFLP Agreements, the Collection
Account and the other Collateral described in the Indenture. Accordingly, the
Lessee agrees that:
(i) Subject to the terms of the Indenture, the Trustee shall have all
the rights, powers, privileges and remedies of the Lessor hereunder.
Specifically, the Lessee agrees that, upon the occurrence of an
Amortization Event, the Trustee or, with respect to any Master Collateral,
the Master Collateral Agent (for and on behalf of the Trustee) may exercise
any right or remedy against the Lessee provided for herein or in the
Indenture or the Master Collateral Agency Agreement and the Lessee will not
interpose as a defense that such claim should have been asserted by the
Lessor;
(ii) Upon the delivery by the Master Collateral Agent or the Trustee
of any notice to the Lessee stating that a Lease Event of Default or an
Amortization Event with respect to the Lessee has occurred, then the
Lessee, will, if so requested by the Master Collateral Agent (with respect
to the Master Collateral) or the Trustee (with respect to the Collateral),
treat the Master Collateral Agent or the Trustee or the Master Collateral
Agent's or the Trustee's designee, as the case may be, for all purposes as
the Lessor hereunder and in all respects comply with all obligations under
this Agreement that are asserted by the Master Collateral Agent or the
Trustee as the successor to the Lessor hereunder, irrespective of whether
the Lessee has received any such notice from the Lessor;
(iii) The Lessee acknowledges that pursuant to the Indenture, the
Lessor has irrevocably authorized and directed the Lessee to, and the
Lessee shall, make payments of Rent hereunder directly to the Trustee for
deposit in the Collection Account established by the Trustee for receipt of
such payments pursuant to the Indenture, and such payments shall discharge
the obligation of the Lessee to the Lessor hereunder with respect to Rent
to the extent of such payments. Upon written notice to the Lessee of a sale
or assignment by the Trustee or Master Collateral Agent of its right, title
and interest in moneys due under this Agreement or the Master Collateral
Agency Agreement to a successor Trustee or Master Collateral Agent, the
Lessee shall thereafter make payments of Rent hereunder or payments in
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respect of the Master Collateral, as applicable, to the party specified in
such notice;
(iv) Upon request made by the Master Collateral Agent at any time, the
Lessee will take such actions as are requested by the Master Collateral
Agent to maintain the Master Collateral Agent's perfected first priority
security interest in the Vehicles leased under this Agreement, the
Certificates of Title with respect thereto and the Master Collateral
pursuant to the Master Collateral Agency Agreement;
(v) A security interest in the Lessor's rights under this Agreement
has been granted by the Lessor to the Trustee pursuant to the Indenture as
collateral security only for all Series of Notes that do not provide for
wholly series-specific collateral and, accordingly, all references herein
to "all" Series of Notes shall refer only to all Series of Notes that do
not provide for wholly series-specific collateral;
(vi) The Trustee is hereby irrevocably appointed the true and lawful
attorney-in-fact of the Lessee, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property of the Lessee sold pursuant to Section 9.3 of the Base
Indenture (including without limitation, any Financed Vehicles) and for
such other purposes as are necessary or desirable to effectuate the
provisions of the Indenture, and for that purpose the Trustee may execute
and deliver all necessary deeds, bills of sale and instruments of
assignment and transfer, and may substitute one or more Persons with like
power, the Lessee hereby ratifying and confirming all that its said
attorney, or Such substitute or substitutes, shall lawfully do by virtue
hereof, but if so requested by the Trustee or by any purchaser, the Lessee
shall ratify and confirm any such sale or transfer by executing and
delivering to the Trustee or to such purchaser all such property, deeds,
bills of sale, instruments of assignment and transfer and releases as may
be designated in any such request; and
(vii) In the event that the Trustee determines to take action pursuant
to the provisions of Section 9.2(e) of the Base Indenture, the Trustee may,
without notice to the Lessor (unless such notice is required by applicable
state law), the Servicer or the Lessee, direct the Master Collateral Agent
to take legal proceedings for the appointment of a receiver to take
possession of Vehicles pending the sale thereof and in any such event the
Trustee shall be entitled to the appointment of a receiver for the
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Vehicles, and none of the Lessor, the Servicer or the Lessee shall
object to such appointment.
SECTION 22. MODIFICATION AND SEVERABILITY. No delay on the part of the
Lessor, the Trustee or the Master Collateral Agent in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial exercise by any of them of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement shall in any event be effective unless (a) the same
shall be in writing and signed and delivered by the Lessor and the Lessee, (b)
consented to in writing by the Trustee (unless such amendment, modification,
waiver or consent (i) is made only (A) to cure any ambiguity, defect or
inconsistency in, or to correct or supplement any provision of, this Agreement
or (B) to add to the covenants of the Lessee for the benefit of the Lessor or
(C) to provide for additional collateral and (ii) as evidenced by an Opinion of
Counsel delivered by the Lessee to the Trustee, will not materially adversely
affect the interests of the Lessor, the Trustee or the Secured Parties) and (c)
the Lessor 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 will not be reduced or withdrawn as a result thereof.
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES. National, in its
capacity as Lessee and as Servicer represents and warrants to the Lessor that as
of the Closing Date with respect to the first Series of Notes and as of each
other date as may be specified in Section 23.7 hereof (and each of such
representations and warranties will be deemed to be remade as of the Closing
Date with respect to each Series of Notes):
Section 23.1. Organization: Ownership: Power: Qualification. National, in
its capacities as Lessee and as Servicer (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be
conducted, and (iii) is duly qualified, in good standing and authorized to do
business in each jurisdiction in WHICH the character of its properties or the
nature of its businesses requires such qualification or authorization, except
where the failure to so qualify is not reasonably likely to have a Material
Adverse Effect.
Section 23.2. Authorization: Enforceability. National, in its capacities as
Lessee and as Servicer, has the corporate power and has taken all necessary
corporate action to authorize it to
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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 the Lessee and the Servicer and is, and
each of the other Related Documents to which the Lessee or the Servicer is a
party is, a legal, valid and binding obligation of the Lessee or the Servicer,
as applicable, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
and similar laws affecting creditors generally and by the availability of
equitable remedies.
The execution, delivery and performance by National, in its capacity as the
Lessee and Servicer, of this Agreement does not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation of National or of any rule, contract, agreement,
judgment, injunction, order, decree or other instrument binding upon National or
any of its Assets; except to the extent that any such contravention or default
would not have a Material Adverse Effect.
Section 23.3. Compliance. The execution, delivery and performance, in
accordance with their respective terms, by National, in its capacities as Lessee
and as Servicer of this Agreement and each of the other Related Documents to
which it is a party, and the consummation of the transactions contemplated and
will not (i) require any consent, approval, authorization or registration not
already obtained or effected, except where the failure to obtain any such
consent, approval or authorization or to register is not reasonably likely to
have a Material Adverse Effect, (ii) violate any applicable law with respect to
National, in its capacities as Lessee and as Servicer, as applicable, which
violation is reasonably likely to have a Material Adverse Effect, (iii) conflict
with, result in a breach of, or constitute a default under the certificate of
incorporation or by-laws of National, in its capacities as Lessee and as
Servicer, as applicable, or under any indenture, agreement, or other instrument
to which National, in its capacities as Lessee and as Servicer, as applicable is
a party or by which its properties may be bound, which conflict, breach or
default is reasonably likely to have a Material Adverse Effect, or (iv) result
in or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by National, in its capacities as
Lessee and as Servicer, as applicable except Permitted Encumbrances.
Section 23.4. Financial Information: Financial Condition. All financial
statements (including the notes thereto) referred to in the following sentence
and all financial statements
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hereafter furnished to the Lessor or the Trustee pursuant to Sections 24.6(i),
(ii) and (xii) hereof have been and will be prepared in accordance with GAAP
and do and will present fairly the financial condition of the entities involved
as of the dates thereof and the results of their operations for the periods
covered thereby, subject, in the case of all unaudited statements, to normal
year-end adjustments and lack of footnotes and other presentation items. Such
financial statements include the following financial statements and reports
which have been furnished to the Lessor and the Trustee on or prior to the date
hereof:
(i) the audited consolidated balance sheets of Old National and its
Consolidated Subsidiaries as of December 31, 1993 and December 31, 1994 and
the related statements of income, changes in stockholders' equity and cash
flow as of and for the fiscal years ending on such dates;
(ii) the audited consolidated balance sheets of Old National and its
Consolidated Subsidiaries as of June 1, 1995 and the related statements of
income, changes in stockholders' equity and cash flow as of and for the
period from January 1, 1995 through May 31, 1995; and
(iii) the audited consolidated balance sheets of National and its
Consolidated Subsidiaries as of November 30, 1995 and the related
statements of income, changes in stockholders' equity and cash flow as of
and for the period from June 1, 1995 through November 30, 1995.
Section 23.5. Litigation. Except for claims as to which the insurer has
admitted coverage in writing and which are fully covered by insurance, no
claims, litigation (including, without limitation, derivative actions),
arbitration, governmental investigation or proceeding or inquiry is pending or,
to the best of the Lessee's knowledge, threatened against the Lessee which is
reasonably likely to have a Material Adverse Effect.
Section 23.6. Liens. The Vehicles and other Collateral are free and clear
of all Liens other than Permitted Liens. The Lessor (or the Master Collateral
Agent on behalf of the Lessor) has obtained, as security for the obligations of
the Lessee under this Agreement, a first priority perfected Lien on all Vehicles
and all the Master Collateral with respect to which the Trustee is designated as
the Beneficiary under the Master Collateral Agency Agreement. All Vehicle
Perfection and Documentation Requirements with respect to all Vehicles on or
after the date hereof have and will continue to be satisfied; except to the
extent that the failure to comply with such requirements does not, in the
aggregate, materially adversely affect either the
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interests of the Lessor, the Master Collateral Agent, the Trustee or the Secured
Parties under the Indenture or the likelihood of payment of all rent and other
amounts due under this Agreement.
Section 23.7. Employee Benefit Plans. (a) During the twelve consecutive
month period prior to (i) the Closing Date and (ii) each Vehicle Lease
Commencement Date: (x) no steps have been taken by the Lessee or any member of
the Controlled Group, or to the knowledge of the Lessee, by any Person, to
terminate any Pension Plan (other than a Pension Plan with no unfunded benefit
liabilities on a termination basis); and (y) no contribution failure has
occurred with respect to any Pension Plan maintained by the Lessee or any member
of the Controlled Group sufficient to give rise to a Lien under Section
302(f)(1) of ERISA in connection with such Pension Plan; and (b) no condition
exists or event or transaction has occurred with respect to any Pension Plan
which could reasonably be expected to result in the incurrence by the Lessee or
any member of the Controlled Group of liabilities, fines or penalties in an
amount that is reasonably likely to have a Material Adverse Effect.
Section 23.8. Investment Company Act. The Lessee is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act, and the Lessee is not subject to any
other statute which would have a material adverse effect on its ability to
perform its obligations under this Agreement or the other Related Documents, and
the entering into or performance by the Lessee of this Agreement does not
violate any provision of such Act and does not require any consent, approval or
authorization of, or registration with, the Securities and Exchange Commission
or any other governmental or public body or authority.
Section 23.9. Regulations G, T, U and X. The Lessee is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System). Neither the Lessee nor any Person acting on its behalf has
taken or will take action to cause the execution, delivery or performance of
this Agreement to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
Section 23.10. Business Locations; Trade Names. Schedule 23.10 lists where
the Lessee maintains its chief executive office, principal place of business,
and location of its consolidated business and financial records; and Schedule
23.10 also lists the Lessee's legal name and each name under or by which the
Lessee conducts its business and each state in which the Lessee conducts
business.
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Section 23.11. Taxes. The Lessee has filed all tax returns which have been
required to be filed by it, and has paid or provided adequate reserves for the
payment of all taxes, including, without limitation, all payroll taxes and
federal and state withholding taxes, and all assessments payable by it that have
become due, other than those that are not yet delinquent or that are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established, and are being maintained, in accordance
with GAAP. As of the Closing Date, there is no ongoing audit (other than routine
sales tax audits and other routine audits) or, to the Lessee's knowledge, other
governmental investigation of the tax liability of the Lessee and there is no
unresolved claim by a taxing authority concerning the Lessee's tax liability for
any period for which returns have been filed or were due other than those
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established, and are being maintained, in accordance
with GAAP.
Section 23.12. Governmental Authorizations. Each of the Lessee and the
Servicer has all licenses, franchises, permits and other governmental
authorizations necessary for all businesses presently carried on by it
(including owning and leasing the real and personal property owned and leased by
it), except where failure to obtain such licenses, franchises, permits and other
governmental authorizations is not reasonably likely to have a Material Adverse
Effect.
Section 23.13. Absence of Default. No event has occurred or failed to occur
which has not been remedied or waived, the occurrence or non-occurrence which
constitutes, a Lease Event of Default or a Potential Lease Event of Default and
the Lessee is not subject to any judgment, decree or final order pursuant to
which the Lessee or any of its properties may be bound or affected that is
reasonably likely to have a Material Adverse Effect.
Section 23.14. Compliance with Requirements of Law. Each of the Lessee and
the Servicer is in compliance with, and has obtained all qualifications required
under, all applicable Requirements of Law, the failure to comply with which is
reasonably likely to have a Material Adverse Effect.
Section 23.15. Accuracy of Information. All certificates, reports,
statements, documents and other information furnished to the Lessor or the
Trustee by or on behalf of the Lessee pursuant to any provision of any Related
Document, or in connection with or pursuant to any amendment or modification of,
or waiver under, any Related Document, shall, at the time the same are so
furnished, be complete and correct to the extent necessary to give the Lessor or
the Trustee, as the case may be, true and
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accurate knowledge of the subject matter thereof in all material respects, and
the furnishing of the same to the Lessor or the Trustee, as the case may be,
shall constitute a representation and warranty by the Lessee made on the date
the same are furnished to the Lessor or the Trustee, as the case may be, to the
effect specified herein.
Section 23.16. Solvency. As of each Closing Date, the Lessee is not
insolvent (as such term is defined in the Bankruptcy Code), has adequate capital
or assets to carry on its businesses, and intends to and believes that it will
be able to pay its debts as such debts become due.
Section 23.17. Stock Ownership. All common stock of the Lessor owned by the
Lessee is owned free and clear of all Liens.
Section 23.18. Necessary Actions. Upon the Servicer causing the Lien of the
Master Collateral Agent to be noted on the Certificates of Title with respect to
the Vehicles (other than the Initial Vehicles) or as otherwise provided for by
the Master Collateral Agency Agreement or the Indenture, all filings,
registrations and recordings necessary or appropriate to create, preserve,
protect and perfect the security interest granted to the Master Collateral Agent
in respect of the Master Collateral have been accomplished and the security
interest granted to the Master Collateral Agent pursuant to the Master
Collateral Agency Agreement in and to the Master Collateral constitutes a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens other than Permitted Liens and is entitled
to all rights, priorities and benefits afforded to perfected security interests
by the UCC or other relevant law as enacted in any relevant jurisdiction.
Section 23.19. Supplemental Documents True and Correct. All information
contained in any Vehicle Order or other Supplemental Document which has been
submitted, or which may hereafter be submitted by the Lessee to the Lessor is,
or will be, true, correct and complete in all material respects.
Section 23.20. Eligible Vehicles: Eligible Franchisees Each Vehicle is or
will be on the Vehicle Lease Commencement Date for such Vehicle, an Eligible
Vehicle, and each Franchisee leasing a Vehicle from the Lessor is or will be, as
the case may be, an Eligible Franchisee on the date that the Sublease applicable
to such Vehicle commences.
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS. The Lessee and, as applicable,
the Servicer, each covenants and agrees that, until the expiration or
termination of this Agreement, and thereafter until the obligations of the
Lessee and the Servicer under this Agreement and the Related Documents are
satisfied in
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full, unless at any time the Lessor, the Master Collateral Agent and the Trustee
shall otherwise expressly consent in writing, it will:
Section 24.1. Corporate Existence: Foreign Qualification. Do and cause to
be done at all times all things necessary to (i) maintain and preserve its
corporate existence and corporate power and authority to own its properties and
to carry on its business, and (ii) be duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction where the nature of its
business makes such qualification necessary and the failure to so qualify is
reasonably likely to have a Material Adverse Effect.
Section 24.2. Books. Records and Inspections. (i) Maintain complete and
accurate books and records with respect to Vehicles leased under this Agreement
and the other Master Collateral; (ii) at any time and from time to time during
regular business hours, upon reasonable prior notice from the Lessor, the Master
Collateral Agent or the Trustee and subject to the normal security and
confidentiality procedures of the Lessee or the Servicer, provide reasonable
access to such documentation and permit the Lessor, the Master Collateral Agent
or the Trustee (or such other person who may be designated from time to time by
the Lessor, the Master Collateral Agent or the Trustee), or its agents or
representatives to examine and make copies of such books, records and documents
in the possession or under the control of the Lessee relating to the Vehicles
leased under this Agreement and the other Master Collateral as the Lessor, the
Master Collateral Agent, the Master Collateral Agent, the Trustee or such person
may reasonably request (including in connection with the Lessor's, the Trustee's
or the Master Collateral Agent's satisfaction of any requests of a Manufacturer
performing an audit under its Manufacturer Program); and (iii) permit the
Lessor, the Master Collateral Agent or the Trustee to visit the office (which
office shall be in the continental United States and, if it is not the office
where such materials normally are kept, shall be accessible without unreasonable
effort or expense) and properties of the Lessee for the purpose of examining
such materials, and to discuss matters relating to the Vehicles leased under
this Agreement and the other Master Collateral or the Lessee's performance under
this Agreement with the Lessee's independent public accountants or with any of
the officers or employees of the Lessee having knowledge of such matters.
Section 24.3. Accounting Methods; Financial Records. Maintain, and cause
its material Subsidiaries to maintain, a system of accounting established and
administered in accordance with GAAP, keep, and cause its material Subsidiaries
to keep, adequate records and books of account in which complete entries will be
made in accordance with such accounting principles and
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reflecting all transactions required to be reflected by such accounting
principles and keep, and cause its material Subsidiaries to keep, accurate and
complete records of their respective properties and assets.
Section 24.4. Insurance. (a) Maintain or cause to be maintained, with
financially sound and reputable insurers, (i) personal injury and damage
insurance (including self-insurance) with respect to the Vehicles and (ii)
insurance with respect to its properties and business (including self-insurance)
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations and the Lessee shall,
from time to time, deliver to the Lessor and the Trustee, as the Lessor or the
Trustee shall request, copies of certificates describing all insurance then in
effect; provided, however, that the Lessee may continue its current practices of
self-insurance setting aside adequate reserves to cover any and all losses: (x)
which would otherwise be covered under any standard comprehensive and collision
policies of insurance; and (y) arising from liability to third parties for
bodily injuries, death, and property damage in an aggregate amount up to Two
Million Dollars ($2,000,000) per occurrence or such greater amount per
occurrence as may be from time to time hereafter approved in writing by the
Lessor and the Trustee (which approval shall not be unreasonably withheld);
provided, further, however, that the Lessee shall obtain excess insurance
coverage in an amount not less than Thirty Million Dollars ($30,000,000) for any
claims of liability against the Lessee relating to its ownership or use of
vehicles.
(b) The Lessee will require that each insurance policy referred to in the
foregoing clause (a) provide for at least thirty (30) days prior written notice
to the Master Collateral Agent and the Lessor of any termination of or proposed
cancellation or nonrenewal of such policy and that each insurance policy
insuring assets pledged to the Master Collateral Agent name the Master
Collateral Agent as an additional insured or additional loss payee, as
appropriate, pursuant to certificates in form and substance reasonably
satisfactory to the Lessor and the Master Collateral Agent.
Section 24.5. Manufacturer Programs. With respect to each Program Vehicle
leased by the Lessee, comply, and cause the related Franchisee to comply, in all
material respects, with all requirements of the applicable Manufacturer Program
relating to such Vehicle.
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Section 24.6. Reporting Requirements. Except as otherwise specified below,
furnish, or cause to be furnished to the Lessor, the Master Collateral Agent and
the Trustee, in the case of item (iii)(b) and item (vi) below, each Rating
Agency and, in the case of item (ii), item (vi) and item (x), to any Note Owner
that has delivered to the Lessor a written request for same:
(i) Audit Report. As soon as available and in any event within 90 days
after the end of each fiscal year of the Lessee, consolidated and
consolidating financial statements consisting of a balance sheet of the
Lessee and its Subsidiaries as at the end of such fiscal year and
statements of income, stockholders' equity and cash flows of the Lessee
and its Subsidiaries for such fiscal year, setting forth in comparative
form the corresponding figures for the preceding fiscal year (if
applicable), certified by and containing an opinion, unqualified as to
scope, of Xxxxxx Xxxxxxxx & Co. or other independent certified public
accountants of nationally recognized standing selected by the Lessee.
(ii) Quarterly Statements. As soon as available and in any event
within 45 days after the end of each of the first three quarters of each
fiscal year of the Lessee, financial statements consisting of consolidated
and consolidating balance sheets of the Lessee and its Subsidiaries as at
the end of such quarter and statements of income, stockholders' equity and
cash flows of the Lessee and its Subsidiaries for each such quarter,
setting forth in comparative form the corresponding figures for the
corresponding periods of the preceding fiscal year (if applicable), all in
reasonable detail and certified (subject to normal year-end audit
adjustments) by a senior financial officer of the Lessee as having been
prepared in accordance with GAAP.
(iii) Lease Events of Default; Amortization Events. Promptly after
becoming aware thereof, (a) notice of the occurrence of any Potential Lease
Event of Default or Lease Event of Default, together with a written
statement of an Authorized Officer describing such event and the action
that the Lessee proposes to take with respect thereto and (b) notice to the
Lessor, the Trustee, each Enhancement Provider and the Rating Agencies of
any Potential Amortization Event or Amortization Event;
(iv) Monthly Vehicle Statements. On or before each Determination Date,
a monthly vehicle statement (each, a "Monthly Vehicle Statement") in a form
acceptable to the Lessor, which shall specify (i) the last eight digits of
the VIN for each Vehicle leased hereunder during the Related
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Month by the Lessee, (ii) whether such Vehicle is leased under Annex A or
Annex B hereto, (iii) the Capitalized Cost for each such Vehicle and (iv)
the aggregate Net Book Value of such Vehicles as of the end of the Related
Month.
(v) Daily Reports. On each Business Day commencing on the Lease
Commencement Date, prepare and maintain at the office of the Servicer a
record (each, a "Daily Report") setting forth the aggregate of the amounts
deposited in the Collection Account on the immediately preceding Business
Day, which shall consist of: (A) the aggregate amount of payments received
from Manufacturers and/or auction dealers under Manufacturer Programs
related to the Vehicles and deposited in the Collection Account from the
Master Collateral Account, plus (B) the aggregate amount of proceeds
received from third parties (other than Manufacturers and auction dealers)
with respect to the sale of Vehicles and deposited in the Collection
Account from the Master Collateral Account, plus (C) the aggregate amount
of other Collections deposited in the Collection Account. Within one
Business Day after request therefor is made by the Lessor, the Master
Collateral Agent or the Trustee, the Lessee shall deliver a copy of the
Daily Report for any Business Day to the party making such request.
(vi) Monthly Certificate. On each Determination Date, the Servicer
shall forward to the Lessor, the Lessee, the Trustee, the Paying Agent and
the Rating Agencies, an Officer's Certificate of the Servicer substantially
in the form of Exhibit A (each, a "Monthly Certificate") setting forth,
inter alia, the following information (which, in the cases of clauses (c),
(d) and (e) below, will be expressed as a dollar amount per $1,000 of the
original principal amount of the Notes and as a percentage of the
outstanding principal balance of the Notes as of such date): (a) the
aggregate amount of payments received from the Manufacturers and/or auction
dealers under Manufacturer Programs and the aggregate amount of payments
received from third parties (other than Manufacturers and auction dealers)
with respect to the sale of Vehicles and deposited in the Collection
Account from the Master Collateral Account and the aggregate amount of
other Collections deposited in the Collection Account for the Related Month
with respect to such Determination Date; (b) the Invested Percentage on the
last day of the Related Month of each Series of Notes and each class of
each Series; (c) for each Series and each class of each Series, the total
amount to be distributed to Noteholders on the next succeeding Distribution
Date; (d) for each Series and each class of each Series, the amount of such
distribution allocable to principal on the Notes; (e) for each Series and
each class of each Series,
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the amount of such distribution allocable to interest on the Notes; (f) for
each Series and each class of each Series, the amount of Enhancement used
or drawn in connection with the distribution to Noteholders of such Series
or class on the next succeeding Distribution Date, together with the
aggregate amount of remaining Enhancement not theretofore used or drawn;
(g) for each Series, the Series Monthly Servicing Fee for the next
succeeding Payment Date; (h) for each Series and each class of each Series,
the existing Carryover Controlled Amortization Amount, if any; (i) the Pool
Factor with respect to such Related Month for each Series and each class of
each Series; (j) a list of all Acquired Vehicles and Financed Vehicles
leased hereunder at the close of business on the last day of the Related
Month; (k) the Aggregate Asset Amount and the amount of the Aggregate Asset
Amount Deficiency, if any, at the close of business on the last day of the
Related Month; (l) if Enhancement is provided for any Series of Notes or
any class of a Series by means of overcollateralization, the amount of
recoveries and losses for the Related Month, whether an ENHANCEMENT
Deficiency exists with respect to such Series or class and the amount
thereof, or the amount available for such overcollateralization; and (m)
whether, to the knowledge of the Servicer, any Lien exists on any of the
Collateral (other than Liens granted pursuant to the Indenture and the
other Related Documents or permitted thereunder) which is reasonably likely
to have a Material Adverse Effect.
(vii) Monthly Noteholders' Statement. On or before each Distribution
Date, the Servicer shall furnish to the Trustee a Monthly Noteholders'
Statement substantially in the form of Exhibit B.
(viii) Manufacturers. Promptly after obtaining actual knowledge
thereof, notice of any Manufacturer Event of Default or replacement of a
Manufacturer Program.
(ix) Annual Certificate. Annual Officer's Certificates of the Lessee
as follows: The Lessee will deliver to the Lessor, the Trustee, any
applicable Enhancement Provider under the Indenture, and the Rating
Agencies rating any outstanding Series of Notes, on or before August 30 of
each fiscal year, beginning with August 30, 1997, an Officer's Certificate
substantially in the form of Exhibit C (each, an "Annual Certificate") (a)
stating that a review of the activities of the Lessee during the preceding
fiscal year (or during the initial period from the initial Closing Date
until the end of fiscal year 1996) and of its performance under this
Agreement and the other Related Documents to which the Lessee is a party
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was made under the supervision of the officer signing such certificate, (b)
stating that to the best of such officers knowledge, based on such review,
either there has occurred no event which, with the giving of notice or
passage of time or both, would constitute a Lease Event of Default or
Amortization Event and that the Lessee has fully performed all its
obligations under this Agreement and such other Related Documents
throughout such year, or, if there has occurred such event or a Lease Event
of Default or Amortization Event, specifying each such event known to such
officers and the nature and status thereof, and (c) stating (and containing
an Opinion of Counsel to the effect), subject to standard qualifications
and assumptions, that all necessary Uniform Commercial Code continuation
statements and other Uniform Commercial Code filings have been completed
(including, without limitation, any precautionary filings" made by the
Lessees in favor of the Lessor), all necessary Assignment Agreements have
been executed and delivered pursuant to Section 2.1 of the Master
Collateral Agency Agreement, and all other actions, if any, required to
maintain the perfected first priority security interest of the Trustee or
the Master Collateral Agent on behalf of the Trustee in the Collateral and
in the Master Collateral have been taken and that the Trustee or the Master
Collateral Agent continues to have a perfected security interest in the
Collateral and Master Collateral.
(x) Annual Report. Annual reports of independent public accountants as
follows: On or before August 30 of each fiscal year, beginning with August
30, 1997, the Lessee shall cause a firm of nationally recognized
independent public accountants (which may also render other services to the
Servicer) to furnish a report to the Lessor, the Trustee, the Rating
Agencies and any Enhancement Provider to the effect that (i) they have
compared the mathematical calculations of each amount set forth in the
monthly certificates forwarded by the Lessee pursuant to this agreement and
the master collateral agency agreement during the period covered by such
report (which shall be the period from June 1 to and including May 31 of
the prior fiscal year or for the period from the initial Closing Date to
May 31, 1996) with the Lessee's computer reports which were the source of
such amounts and that except for such exceptions as are listed, such
amounts are in agreement, and (ii) they have examined certain documents and
the records relating to the servicing of the Vehicles under this Agreement
and the other Related Documents to which the Lessee is a party and that
with respect to individual items examined, such servicing (including the
allocations of Collections under the Indenture) has been completed in
compliance with all of the terms and conditions set forth in the Indenture,
any
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Supplement, this Agreement and the Master Collateral Agency Agreement,
except for such exceptions as shall be set forth in such report.
(xi) Non-Proqram Vehicle Report. On or before the second Determination
Date after each May 31, beginning with May 31, 1996, the Servicer shall
cause a firm of nationally recognized independent public accountants (which
may also render other services to the Servicer and which is acceptable to
the Rating Agencies) to furnish a report (the "Non-Program Vehicle Report")
to the Lessor, the Trustee, the Rating Agencies, and the Master Collateral
Agent to the effect that they have performed certain agreed upon procedures
with respect to the calculation of Market Value, and 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 the preceding calendar year and compared such calculations of
Market Value and Disposition Proceeds with the corresponding amounts set
forth in the Daily Reports prepared by the Servicer pursuant to clause (v)
above and that on the basis of such comparison such accountants are of the
opinion that such amounts are in agreement, except for such exceptions as
they believe to be immaterial and such other exceptions as shall be set
forth in such report; provided, however, that if on any August 31, November
30, or February 28 the Non-Program Vehicle Percentage equals or exceeds
three percent (3~) then the Servicer shall notify each Rating Agency
thereof in writing and, at the request of any Rating Agency delivered on or
before the fifth (5th) Business Day thereafter, the Servicer shall cause to
be prepared a Non-Program Vehicle Report covering the calendar quarter
ending on such August 31, November 30, or February 28, as applicable, and
shall cause such Non-Program Vehicle Report to be furnished to the Trustee,
the Rating Agencies and the Master Collateral Agent on or before the second
Determination Date after the last day of the quarter to which it relates.
(xii) Other. Promptly, from time to time, such other information,
documents, or reports respecting the Vehicles or the condition, financial
or otherwise, or operations of the Servicer as the Lessor, the Master
Collateral Agent or the Trustee may from time to time reasonably request in
order to protect the interests of the Lessor, the Master Collateral Agent
or the Trustee under or as contemplated by this Agreement or any other
Related Document.
Section 24.7. Taxes and Liabilities. Pay when due all taxes, assessments
and other material (determined on a consolidated basis) liabilities (including
titling fees and
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registration fees payable with respect to Vehicles) except as contested in good
faith and by appropriate proceedings with respect to which adequate reserves
have been established, and are being maintained, in accordance with GAAP if and
so long as forfeiture of any Vehicles or other Master Collateral will not result
from the failure to pay any such taxes, assessments or other material
liabilities during the period of any such contest.
Section 24.8. Maintenance of Separate Existence. The Lessee acknowledges
its receipt of a copy of that certain opinion letter issued by Xxxxx, Xxxxx &
Xxxxx dated April 30, 1996 addressing the issue of substantive consolidation as
it may relate to the Lessee and the Lessor. The Lessee hereby agrees to maintain
in place all policies and procedures, and take and continue to take all actions,
described in the factual assumptions set forth in such opinion letter and
relating to it. On an annual basis, the Lessee will provide to the Rating
Agencies, the Trustee and the Master Collateral Agent, an Officer's Certificate
certifying that it is in compliance with its obligations under this Section
24.8.
Section 24.9. Maintenance of Credit Enhancement. The Lessee agrees to
maintain a letter of credit or other Enhancement in a stated amount which,
together with all other Enhancement provided for in the applicable Supplement,
is equal to or greater than the Required Enhancement Amount for each Series.
Section 24.10. Manufacturer Payments: Sales Proceeds. Any payments from
Manufacturers in respect of Vehicles other than Exchanged Vehicles (whether
relating to Financed Vehicles or to Acquired Vehicles) received directly by the
Lessee will, within two Business Days of receipt, be deposited into the Master
Collateral Account. Any payments from Manufacturers in respect of Exchanged
Vehicle Repurchase Rights which payments are received directly by the Lessee
will, within two Business Days of receipt, be deposited into the Exchange
Account. The Lessee shall, within two Business Days of receipt thereof, deposit
into the Master Collateral Account all amounts received by the Lessee directly,
which amounts represent the proceeds from sales of Vehicles by auction dealers
under a Guaranteed Depreciation Program and sales of Vehicles (including amounts
paid to the Lessee by a Manufacturer as a result of the Lessee's sale of such
Vehicle outside such Manufacturer's Manufacturer Program) by the Lessee to third
parties (other than under any related Manufacturer Program) and all payments
with respect to other Master Collateral (other than the Master Collateral
described in the last sentence of this paragraph). Insurance proceeds (other
than Exchanged Vehicle Insurance Proceeds) with respect to Vehicles will only be
deposited into the Master Collateral Account if an Amortization Event or
Potential Amortization Event shall have occurred and be continuing.
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Section 24.11. Compliance with Requirements of Law. Maintain in effect all
qualifications required under applicable Requirements of Law and will comply
with all other applicable Requirements of Law, the failure to maintain or comply
with which is reasonably likely to have a Material Adverse Effect.
Section 24.12. Delivery of Information. Provide the Lessor with any
information or materials necessary for the Lessor to comply with its obligations
under the Indenture.
Section 24.13. Master Collateral Agent as Lienholder. Maintain certain
computer records as follows: Concurrently with each leasing of a Vehicle under
this Agreement, the Servicer shall indicate on its computer records that the
Master Collateral Agent as assignee of the Lessor or the Lessee, as the case may
be, is the holder of a Lien on such Vehicle for the benefit of the Trustee
pursuant to the terms of the Master Collateral Agency Agreement. National shall
not utilize selection procedures which it believes are ADVERSE TO THE LESSOR OR
THE TRUSTEE in selecting the Vehicles to be designated to the Lessor as a
Financing Source and the Trustee as a Beneficiary under the Master Collateral
Agreement.
Section 24.14. Maintenance of the Vehicles. The Lessee will maintain and
cause to be maintained in good repair, working order, and condition all of the
Vehicles in accordance with its ordinary business practices with respect to all
other vehicles owned or leased by it and will use its best efforts to maintain
each Program Vehicle as an eligible vehicle under the related Manufacturer
Program, except in each case to the extent that any such failure to comply with
such requirements is not reasonably likely to, in the aggregate, materially
adversely affect the interests of the Lessor, the Master Collateral Agent or the
Trustee on behalf of the Secured Parties under the Indenture or the likelihood
of payment of all amounts due hereunder. National will perform all of its
obligations as Servicer in all material respects as set forth in the Master
Collateral Agency Agreement.
Section 24.15. Certificates of Title. The Servicer shall take, or shall
cause to be taken, such action as shall be necessary to submit all of the
Certificates of Title (other than Certificates of Title with respect to the
Initial Vehicles) to the appropriate state authority for notation of the Master
Collateral Agent's lien thereon. Pursuant to the Master Collateral Agency
Agreement, the original Certificates of Title relating to the Vehicles shall be
held by the Servicer, in trust for the benefit of the Master Collateral Agent
and the Trustee as assignee of the Lessor. The Certificates of Title shall be
subject to all of the provisions of the Master Collateral Agency Agreement.
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Section 24.16. Release of Collateral. The parties agree that pursuant to
the provisions of this Section 24.16 and Sections 2.3 and 2.7 of the Master
Collateral Agency Agreement, any and all the Liens for the benefit of the Lessor
(including the Lien of the Trustee as assignee of the Lessor and as Beneficiary
under the Master Collateral Agency Agreement) on the Vehicles and the
Certificates of Title therefor shall be released or deemed to be released, as
provided below. From and after the earliest of:
(a) in the case of a Program Vehicle, the Disposition Date for such
Vehicle; or
(b) receipt of the purchase price by the Lessee for a Non-Program
Vehicle sold in an ordinary course sale; or
(c) the payment in full of all obligations under this Agreement with
respect to a Vehicle,
any and all Liens for the benefit of the Lessor (including the Lien of the
Trustee as assignee of the Lessor and as Beneficiary under the Master Collateral
Agency Agreement) on such Vehicle and the Certificate of Title therefor shall be
deemed to be released. The Lessor shall, and shall cause the Trustee and the
Master Collateral Agent to, execute such documents and instruments as the Lessee
may reasonably request (including a power of attorney of the Master Collateral
Agent appointing the Lessee to act as the agent of the Master Collateral Agent
in taking such actions as are required to evidence the release of the Lien of
the Master Collateral Agent on Vehicles turned back or sold pursuant to the
provisions of this Section 24.16, which power of attorney shall be revocable
pursuant to Section 2.7(b) of the Master Collateral Agency Agreement).
Section 24.17. Change of Location or Name. During the Term, the Lessee will
not change (a) the location of its principal place of business, chief executive
office or its consolidated records concerning its business and financial
affairs, or (b) its legal name or the name under or by which it conducts its
business, in each case without first giving the Master Collateral Agent, the
Trustee and the Lessor at least 60 days' advance written notice thereof and
having taken any and all action required to maintain and preserve the first
priority perfected Lien of the Master Collateral Agent in the Master Collateral;
provided, however, that notwithstanding the foregoing, the Lessee shall not
change the location of its principal place of business, chief executive office
or its consolidated records concerning its business and financial affairs to any
place outside the United States of America.
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Section 24.18. Deliveries: Further Assurances. The Lessee agrees that it
will, at its sole expense, (i) immediately deliver or cause to be delivered to
the Lessor (or the Master Collateral Agent on the Lessor's behalf), in due form
for transfer (i.e., endorsed in blank), all securities, chattel paper,
instruments and documents, if any, at any time representing all or any of the
Master Collateral with respect to which the Trustee is designated as the
Beneficiary (it being understood that the Certificates of Title shall be held by
the Servicer or the Master Collateral Agent, as the case may be, pursuant to the
provisions of the Master Collateral Agency Agreement), and (ii) execute and
deliver, or cause to be executed and delivered, to the Lessor or the Master
Collateral Agent, as the case may be, in due form for filing or recording (and
pay the cost of filing or recording the same in all public offices reasonably
deemed necessary or advisable by the Lessor or the Master Collateral Agent or
the Trustee, as the case may be), such assignments, security agreements,
mortgages, consents, waivers, financing statements, and other documents, and do
such other acts and things, all as may from time to time be reasonably necessary
or, upon the request of the Lessor or the Master Collateral Agent advisable to
establish and maintain to the satisfaction of the Lessor, the Master Collateral
Agent and the Trustee a valid perfected first priority Lien on and security
interest in all of the Master Collateral with respect to which the Trustee is
designated as the Beneficiary now or hereafter existing or acquired.
Section 24.19. Additional Actions. The Lessor hereby directs, authorizes
and empowers the Servicer to, and the Servicer hereby agrees that it shall:
(a) instruct the Trustee or the Paying Agent, as applicable, to make
withdrawals and payments from the Collection Account, as contemplated in
the Indenture;
(b) at the request of the Trustee as required or permitted upon or
after the occurrence of certain events specified in the Indenture and, to
the extent permitted under and in compliance with applicable laws and
regulations, execute and deliver, for the benefit of the Noteholders under
the Indenture, any and all instruments necessary or appropriate to commence
or maintain enforcement proceedings with respect to Manufacturer Programs
or any Enhancement;
(c) make any filings, reports, notices, applications, or registrations
with, and to seek any consents or authorizations from the Securities and
Exchange Commission and any state securities laws authority on behalf of
the Lessor as may be necessary to comply with any Federal or state
securities laws or reporting requirements or laws;
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(d) upon the occurrence of a Series 1996-1 Lease Payment Deficit,
deliver to the Trustee a notice in the form attached hereto as Exhibit E;
and
(e) perform such other functions and take such other actions as it is
designated to perform or take pursuant to the terms and conditions of any
Related Document.
Section 24.20. Subleases. The Lessee agrees that each Sublease will include
provisions consistent with each contained in Section 28 of the Lease pursuant to
which, inter alia, each Sublessee expressly and irrevocably submits to the
non-exclusive jurisdiction of all federal and state courts of the State of New
York and shall also include a provision whereby each Sublessee agrees to be
bound by the provisions of Section 9.2(b) of the Base Indenture.
SECTION 25. CERTAIN NEGATIVE COVENANTS. Until the expiration or termination
of this Agreement and thereafter until the obligations of the Lessee are paid in
full, the Lessee agrees that, unless at any time the Lessor, the Master
Collateral Agent and the Trustee shall otherwise expressly consent in writing,
it will not:
Section 25.1. Mergers. Consolidations. Be a party to any merger or
consolidation, other than (i) a merger or consolidation of any Affiliate of the
Lessee into or with the Lessee (provided that the Lessee is the surviving
corporation) or (ii) a merger or consolidation of the Lessee into or with
another entity if:
(a) the corporation formed by such consolidation or into or with which
the Lessee is merged shall be a corporation organized and existing under
the laws of the United States of America or any State or the District of
Columbia, and, if the Lessee is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and delivered to the
Trustee, the Lessor and the Master COLLATERAL AGENT, THE PERFORMANCE of
every covenant and obligation of the Lessee hereunder and under all other
Related Documents;
(b) the Lessee has delivered to the Trustee, the Lessor and the Master
Collateral Agent an officer's certificate and an opinion of counsel each
stating that such consolidation or merger and such supplemental agreement
comply with this Section 25.1 and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
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(c) each Rating Agency has confirmed in writing that such assignment
and succession will not cause the rating of any outstanding series of Notes
to be lowered or withdrawn.
Section 25.2. Regulations G, T, U and X. Use or permit any amounts funded
by the Lessor pursuant to the Financing Lease to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
repurchasing or carrying margin stock" within the meaning of Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System, as amended from
time to time.
Section 25.3. Liens. Create or permit to exist any Lien with respect to any
Master Collateral with respect to which the Trustee is designated as the
Beneficiary, whether now or hereafter existing or acquired, except Permitted
Liens.
Section 25.4. Use of Vehicles. Use or contractually permit any Vehicles to
be used in any manner (i) that, with respect to Program Vehicles, would make
such Vehicles ineligible for repurchase or Auction under the related Eligible
Manufacturer Program, (ii) for any illegal purposes or (iii) that could subject
any Vehicles to confiscation.
Section 25.5. Percentage of Non-Program Vehicles. Permit (i) the aggregate
Net Book Value of all Non-Program Vehicles leased hereunder on any day to exceed
any applicable Maximum Non-Program Vehicle Amount or (ii) the aggregate Net Book
Value of Non-Program Vehicles manufactured by a single Manufacturer (other than
an Approved Non-Program Vehicle Manufacturer) to exceed any applicable Maximum
Manufacturer Amount.
Section 25.6. Acquisition and Financing of Vehicles. Other than with
respect to Initial Vehicles use funds on deposit in or required to be deposited
into the Excess Funding Account (as defined in the related Supplement) or the
Retained Distribution Account to acquire or finance Vehicles manufactured by
Chrysler during any calendar month or series of consecutive calendar months if
the Vehicle Ratio (calculated without taking the Initial Vehicles into account)
for such month or series of months exceeds the following amounts:
For any month 30%
For any two consecutive months 50%
For any three consecutive months 70%
For any four consecutive months 80%
For any five consecutive months 90%
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SECTION 26. SERVICING COMPENSATION.
Section 26.1. As compensation for its servicing activities hereunder and
reimbursement for its expenses as set forth in Section 26.2, the Servicer shall
be entitled to receive from the Lessor a monthly servicing fee (the "Monthly
Servicing Fee"), payable in arrears on each Payment Date prior to the
termination of this Lease, the Indenture and the Master Collateral Agency
Agreement in an amount equal to the sum of the monthly servicing fees for all
Series of Notes. Except as otherwise specified in the related Supplement, the
Monthly Servicing Fee for each Series of Notes (each, a "Series Monthly
Servicing Fee") on each Payment Date shall be equal to (i) the portion of the
Supplemental Servicing Fee allocated to such Series of Notes pursuant to the
related Supplement, plus (ii) one-twelfth of the product of (A) the Servicing
Fee Percentage for such Series and (B) the Invested Amount of such Series as of
the preceding Payment Date (after giving effect to any payments of principal on
such date). The Series Monthly Servicing Fee for each Series shall be paid to
the Servicer pursuant to the procedures set forth in the applicable Supplement.
The supplemental servicing fee (the "Supplemental Servicing Fee") for any period
shall be equal to all Carrying Charges comprising payments due from the Servicer
under Section 26.2 hereof.
Section 26.2. The Servicer's expenses include, and the Servicer agrees to
pay, the amounts due to the Trustee pursuant to Section 10.5 of the Indenture,
plus the reasonable fees and disbursements of independent accountants in
connection with reports furnished pursuant to Sections 24.6(i). (ii), (x) and
(xi), plus all other fees, expenses and indemnities incurred by the Servicer or
the Lessor in connection with the Servicer's activities hereunder or under the
Related Documents. The Servicer, however, shall not be liable for any
liabilities, costs or expenses of the Lessor, the Trustee or the Noteholders
arising under any tax law, including without limitation any Federal, state or
local income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith), except to the extent incurred as a result of the
Servicer's violation of the provisions of this Lease or of the Related
Documents; provided, however, the foregoing provisions of this sentence shall
not affect the indemnification obligations of the Lessee under Section 15 of the
Lease. In the event that the Servicer fails to pay any amount due to the Trustee
pursuant to Section 10.5 of the Base Indenture, the Trustee will be entitled to
receive such amounts due from the Monthly Servicing Fee prior to payment thereof
to the Servicer.
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SECTION 27. BANKRUPTCY PETITION AGAINST LESSOR. The Lessee hereby covenants
and agrees that, prior to the date which is one year and one day after the
payment in full of all Series of Notes, it will not institute against, or join
any other Person in instituting against, the Lessor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States. In the event that the Lessee takes action in violation of this
Section 27, the Lessor agrees, for the benefit of the Noteholders, that it shall
file an answer with the bankruptcy court or otherwise properly contest the
filing of such a petition by the Lessee against the Lessor or the commencement
of such action and raise the defense that the Lessee has agreed in writing not
to take such action and should be estopped and precluded therefrom and such
other defenses, if any, as its counsel advises that it may assert. The
provisions of this Section 27 shall survive the termination of this Agreement.
SECTION 28. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE TRUSTEE, THE LESSOR OR THE LESSEE SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTaBRN DISTRICT OF NEW YORR; PROVIDED, HOWEVER,
TEAT ANY SUIT SEEPING ENFORCEMENT AGAINST ANY VEHICLE OR OTHER PROPERTY MAY BE
BROUGHT, AT THE LESSOR'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
VEHICLE OR OTHER PROPERTY MAY BE FOUND. THE LESSEE HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JUCISDICTION OF ALL FEDERAL AND STATE
COURTS OF THE STATE OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE LESSEE (AND EACH SUBLESSEE) FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS By REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE
LESSEE AND THE LESSOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE LESSEE HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT.
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SECTION 29. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. All obligations of the
Lessee and all rights of the Lessor, the Master Collateral Agent or the Trustee
expressed herein shall be in addition to and not in limitation of those provided
by applicable law or in any other written instrument or agreement.
SECTION 30. 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 31. 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. In
each case, a copy of all notices, requests and other communications (other than
any such notices, requests and other communications in the ordinary course of
business) that are sent by any party or signatory hereunder shall be sent to the
Trustee at the following address:
THE BANK OF NEW YORK
000 Xxxxxxx Xxxxxx
Floor 12 East
New York, New York 10286
Attention: Corporate Trust Division
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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SECTION 32. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
SECTION 33. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute one and the same Agreement.
SECTION 34. EFFECTIVENESS. This Agreement shall become effective on the
Lease Commencement Date, subject to the prior or concurrent delivery of each of
the following documents (in form and substance satisfactory to the Lessor):
(a) Certificate of Incorporation. The certificate of incorporation of
the Lessee, duly certified by the Secretary of State of the jurisdiction of
its incorporation, together with a copy of its by-laws, duly certified by
the Secretary or an Assistant Secretary of the Lessee;
(b) Resolutions. Copies of resolutions of the Board of Directors of
the Lessee and of the Servicer 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 Assistant
Secretary of the Lessee;
(c) Consents. etc. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if any)
with respect to this Agreement;
(d) Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of the Lessee and of the Servicer 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 Lessor, the Master Collateral
Agent and the Trustee may conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein);
(e) Opinions of Counsel. The opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx,
counsel for the Lessee and the Servicer, addressed to the Lessor, the
Trustee, the Master Collateral Agent, the Enhancement Providers, the
Initial Purchasers and the Rating Agencies; the opinion of Xxxxx, Xxxxx &
Xxxxx, addressed to the Lessee, the Lessor, the Trustee, the Master
Collateral Agent, the Enhancement Providers, the Placement
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Agents and the Rating Agencies; the opinion of each Manufacturer addressed
to the Lessee, the Lessor, the Trustee, the Master Collateral Agent, the
Enhancement Providers and the Rating Agencies; the opinion of counsel to
each Enhancement Provider, addressed to the Lessee, the Lessor, the
Trustee, the Master Collateral Agent, the Placement Agents and the Rating
Agencies; the opinion of Xxxxx, Xxxxxx & Xxxxxx, counsel to the Trustee,
addressed to the Lessee, the Lessor, the Placement Agents, the Master
Collateral Agent and each Enhancement Provider; and the opinion of Xxxxxx
Xxxxxx, Minnesota counsel to the Lessee, addressed to the Lessor, the
Trustee, the Enhancement Providers, the Placement Agents and the Rating
Agencies, in each case, satisfactory in form and substance to the
addressees thereof;
(f) Good Standing Certificates. Certificates of good standing for the
Lessee in the jurisdiction of its organization and the jurisdiction of its
principal place of business;
(g) Search Reports. A written search report from a Person satisfactory
to the Lessor and the Trustee listing all effective financing statements
that name the Lessee as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to subsection (h) below,
together with copies of such financing statements, and tax and judgment
lien search reports from a Person satisfactory to the Lessor and the
Trustee showing no evidence of such liens filed against the Lessee;
(h) Evidence. Evidence of the filing of proper financing statements on
Form WCC-1, (i) naming the Lessee as debtor and the Master Collateral Agent
as secured party or other, similar instruments or documents, as may be
necessary or desirable under the UCC of all applicable jurisdictions to
perfect the Master Collateral Agent's interest in the Master Collateral
with respect to which the Trustee is designated as the Beneficiary and (ii)
naming the Lessee as debtor, the Lessor as secured party and the Master
Collateral Agent as assignee, as may be necessary or desirable under the
UCC of all applicable jurisdictions to perfect the precautionary security
interest of the Lessor hereunder and the assignment of the same to the
Master Collateral Agent;
(i) Master Collateral Agency Agreement. An executed copy of the Master
Collateral Agency Agreement;
(j) Intercreditor Agreement. An executed copy of the Intercreditor
Agreement;
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(k) Joinder to Intercreditor Agreement. An executed copy of the
Joinder Agreement in form attached hereto as Exhibit D;
(l) Vehicle Title Nominee Agreement. An executed copy of the Vehicle
Title Nominee Agreement;
(m) GM Guaranty. An executed copy of the GM Guaranty;
(n) Assignment Agreement. An executed copy of the Assignment Agreement
of each Manufacturer;
(o) Certified Copy of Manufacturer Program. A copy of each
Manufacturer Program relating to Vehicles which will be leased hereunder
and an Officer's Certificate, dated the Closing Date, and duly executed by
an Authorized Officer of the Lessee, certifying that each such copy is
true, correct and complete as of the Closing Date;
(p) Assignment of GMAC Lien: Evidence of Filing of UCC Termination
Statements.
(i) An executed copy of an assignment agreement, pursuant to
which GMAC has assigned its interest in the certificates of title with
respect soothe Initial Vehicles to the Master Collateral Agent; and
(ii) Evidence of the filing of proper financing statements (form
WCC-3) necessary to release all security interests and other rights of
GMAC in the Initial Vehicles previously granted by Old National to
GMAC:
(q) The Indenture, dated the Closing Date, duly executed by the Lessor
and the Trustee, and all conditions to the effectiveness thereof and the
issuance of the Notes thereunder shall have been satisfied in all respects;
(r) A letter of credit, executed by Deutsche Bank AG, New York Branch,
with an initial stated amount of $15,000,000;
(s) The representations and warranties contained in Section 23 shall
be true and correct in all respects (except to the extent any such
representation and warranty does not incorporate a materiality limitation
in its terms and the failure of such representation and warranty to be true
and correct in all respects does not materially adversely affect the
interest of the Lessor, the Trustee or the Secured Parties); and
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(t) Other. Such other documents as the Trustee or the Lessor may
reasonably request.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused
it to be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
LESSEE AND SERVICER:
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/
-----------------------------------
Name:
Title:
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
LESSOR:
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL FINANCING
CORPORATION,
its General Partner
By: /s/
-----------------------------------
Name:
Title:
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
60
Acknowledged by:
MASTER COLLATERAL AGENT
CITIBANK. N.A.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Trust Officer
Address: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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ANNEX A
ANNEX
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of April 30, 1996
between
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
and
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee
62
1. Scope of Annex. This Annex A shall apply only to the acquisition,
leasing and servicing of the Acquired Vehicles by NFLP pursuant to the Base
Lease, as supplemented by this Lease Annex (collectively, the "Operating
Lease").
2. General Agreement. Lessor and Lessee intend that for all purposes
(including, but not limited to, financial accounting, regulatory accounting,
federal income tax purposes and all applicable state and local income,
franchise, sales, use and excise tax purposes and for purposes of any foreign
corporation, business registration or doing business statutes), (A) the Lease
with regard to Acquired Vehicles will be treated as an "operating lease"
pursuant to Statement of Financial Accounting Standards No. 13, as amended, as
well as for all tax purposes, (B) Lessor will be treated as the owner and lessor
of the Acquired Vehicles, (C) Lessee will be treated as the lessee of the
Acquired Vehicles, and (D) Lessor will be entitled to all tax benefits
ordinarily available to an owner of property similar to the Acquired Vehicles
for such tax purposes.
3. Operating Lease Commitment. (a) Upon the execution and delivery of this
Operating Lease, the Lessor shall, subject to the terms and conditions of the
Agreement, purchase from time to time on or after the Lease Commencement Date
and prior to the Lease Expiration Date, all Acquired Vehicles identified in
Vehicle Orders placed by the Lessee for a purchase price equal to the
Capitalized Cost thereof, and simultaneously therewith, the Lessor shall under
the Operating Lease enter into operating leases with the Lessee with respect to
such Vehicles; provided, that the aggregate Net Book Value of Acquired Vehicles
leased hereunder on any date shall not exceed (a) the Maximum Lease Commitment,
less (b) the Base Amount as of such date with respect to the Financing Lease.
4. Lease Procedures. In connection with the Lease of any Acquired Vehicles
to be leased on or after the Lease Commencement Date, to evidence the
acquisition of such Acquired Vehicles by the Lessor, the Lessee shall deliver to
the Lessor the following:
(a) a Vehicle Order (including a Vehicle Acquisition Schedule) with
respect to all Acquired Vehicles to be leased by the Lessor on the related
Vehicle Lease Commencement Date;
(b) UCC termination statements terminating, or UCC partial releases
releasing, any security interests and other liens (other than Permitted
Liens) in favor of any Person with respect to each Acquired Vehicle leased
on the Lease Commencement Date and identified in such Vehicle Order, and
any related Manufacturer Programs;
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(c) with respect to the initial lease of Acquired Vehicles, a fully
executed Assignment Agreement covering the related Manufacturer Programs.
The Lessee hereby agrees that each such delivery of a Vehicle Order shall
be deemed hereunder to constitute a representation and warranty by the Lessee,
to and in favor of the Lessor and the Trustee, that all the conditions precedent
to the acquisition and leasing of the Vehicles identified in such Vehicle Order
have been satisfied as of the date of such Vehicle Order.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
Operating Lease as it relates to each Acquired Vehicle leased hereunder shall be
from the Vehicle Lease Commencement Date to the date that is 18 months from the
Vehicle Lease Commencement Date. On the occurrence of such date for a Vehicle
not previously disposed of, the Lessee shall, (a) on behalf of the Lessor,
promptly dispose of such Vehicle in accordance with the terms hereof and in
accordance with any instructions of the Lessor for such disposition, (b) in each
case, provide that Disposition Proceeds be paid directly to the Master
Collateral Account for the benefit of the Trustee and (c) pay to the Master
Collateral Agent or the Trustee, in accordance with this Operating Lease, any
other amounts unpaid and owing from the Lessee under the Lease in respect of
such Vehicle.
6. Lessee's Rights to Purchase Vehicles. The Lessee will have the option,
exercisable with respect to any Acquired Vehicle during the Vehicle Term with
respect to such Acquired Vehicle, to purchase any Vehicles leased under this
Agreement at the Vehicle Purchase Price, in which event the Lessee will pay the
Vehicle Purchase Price to the Master Collateral Agent on or before the Payment
Date next succeeding such purchase by the Lessee plus all accrued and unpaid
Monthly Base Rent and Monthly Variable Rent with respect to such Vehicle through
the date of such purchase. Upon receipt of such funds by the Master Collateral
Agent, the Lessor shall cause title to any such Vehicle to be transferred to the
Lessee, the lien of the Master Collateral Agent in such Vehicle will
automatically be released and the Servicer shall cause the Master Collateral
Agent to cause the notation of its lien to be removed from the certificate of
title for such Vehicle, concurrently with or promptly after the Vehicle Purchase
Price for such Vehicle (and any unpaid Monthly Base Rent and unpaid Monthly
Variable Rent) is paid by the Lessee to the Master Collateral Agent.
7. Vehicle Disposition. Subject to the Servicer's right to redesignate
Program Vehicles as Non-Program Vehicles under Section 14 of the Base Lease, the
Lessor and the Lessee agree
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64
that, with respect to Acquired Vehicles, the Lessee shall use commercially
reasonable efforts to deliver each Program Vehicle for sale at Auction or to
return each Program Vehicle to the related Manufacturer during the Repurchase
Period for such Vehicle; provided, however, if for any reason, the Lessee fails
to deliver such a Program Vehicle to the applicable Manufacturer for repurchase
by the Manufacturer or to an Auction for sale, in each case in accordance with
the applicable Manufacturer Program, during the Repurchase Period, the Lessee
shall be obligated to sell or otherwise dispose of such Program Vehicle and pay
a Late Return Payment with respect thereto, in each case as provided in Section
13 of the Base Lease. The Lessee shall, with respect to Acquired Vehicles that
are Program Vehicles, pay the equivalent of the Monthly Base Rent for the
minimum holding period under the applicable Manufacturer Program for Program
Vehicles returned before the expiration of such minimum holding period,
regardless of actual usage, unless such minimum holding period is waived by the
Manufacturer or such a Program Vehicle is a Casualty, in which case, Section 7
of the Base Lease shall apply with respect to such Vehicle. All Repurchase
Prices and Disposition Proceeds due from the disposition of Program Vehicles
pursuant to this Section shall be due and payable to the Lessor. The Lessor and
the Lessee agree, with respect to Acquired Vehicles, that the Lessee shall use
commercially reasonable efforts to dispose of each Non-Program Vehicle (a) in a
manner most likely to maximize proceeds from such disposition and consistent
with industry practice and (b) within eighteen (18) months after the date of the
original dealer invoice for such Vehicle sold as a new vehicle. All Disposition
Proceeds due from the disposition of Non-Program Vehicles pursuant to this
Section shall be due and payable to the Lessor.
8. Lessor's Right to Cause Vehicles to be Sold. Notwithstanding anything to
the contrary contained in the Agreement, the Lessor shall have the right, at any
time after the date fourteen (14) days prior to the expiration of the Repurchase
Period for any Program Vehicle leased under this Annex A, to require that the
Lessee deliver such Program Vehicle to the Manufacturer for repurchase or, as
applicable, to the designated Auction for sale, or exercise commercially
reasonable efforts to arrange for the sale of such Program Vehicle to a third
party for a price greater than the Net Book Value thereof, in which event the
Lessee shall, prior to the expiration of such Repurchase Period, deliver such
Vehicle to its Manufacturer or the designated Auction or arrange for the sale of
such Program Vehicle to a third party for a price greater than the Net Book
Value (or purchase the Program Vehicle itself from the Lessor for the Vehicle
Purchase Price). If a sale of the Program Vehicle is arranged by the Lessee
prior to the expiration of such Repurchase Period, then the Lessee shall deliver
the Program Vehicle to the purchaser thereof, the Lien of the Master Collateral
Agent on the
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Certificate of Title of such Program Vehicle shall be released, and the Lessee
shall cause to be delivered to the Lessor the funds paid for such Program
Vehicle by the purchaser. If the Lessee is unable to arrange for a sale of the
Program Vehicle prior to the expiration of such Repurchase Period, then the
Lessee shall cease attempting to arrange for such a sale and shall return such
Program Vehicle to the applicable Manufacturer or tender such Program Vehicle
for Auction or purchase such Vehicle as herein provided. In no event may any
Program Vehicle be sold pursuant to this Paragraph 8 (other than pursuant to a
Manufacturer Program) unless the funds to be paid to the Lessor arising out of
such sale (including any amounts paid by the Manufacturer as an incentive for
selling such Program Vehicle outside of the related Manufacturer Program) exceed
the Net Book Value of such Vehicle less reasonably predictable Excess Mileage
Charges, Excess Damage Charges, Missing Equipment Charges and other similar
charges imposed by the Manufacturer.
9. Calculation of Rent. Rent shall be due and payable on a monthly basis as
set forth in this paragraph 9:
"Monthly Base Rent", with respect to each Payment Date and each
Acquired Vehicle leased under the Lease on any day during the Related
Month, shall be the sum of all Depreciation Charges that have accrued with
respect to such Vehicle during the Related Month.
"Monthly Variable Rent", with respect to each Payment Date and each
Acquired Vehicle leased under the Lease on any day during the Related
Month, shall equal the sum, without double counting, of (a) the product of
(i) an amount equal to the Net Book Value of such Acquired Vehicle on the
first day contained within both the Related Month and the Vehicle Term with
respect to such Vehicle multiplied by the VFR for the Interest Period
ending on the next succeeding Payment Date and (ii) the quotient obtained
by dividing (A) the number of days contained within both the Related Month
and the Vehicle Term with respect to such Acquired Vehicle by (B) the total
number of days in the Related Month, plus (b) the product of (i) an amount
equal to all Carrying Charges for the Related Month, and (ii) the quotient
obtained by dividing the Net Book Value of such Acquired Vehicle as of the
first day of the Related Month by the Net Book Value of all Vehicles leased
under the Lease as of the first day of the Related Month.
"Rent" means Monthly Base Rent plus Monthly Variable Rent.
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66
10. Payment of Rent and other Payments.
(a) Monthly Base Rent. On each Payment Date, the Lessee shall pay to
the Lessor the Monthly Base Rents that have accrued during the Related
Month with respect to all Vehicles that were leased under the Operating
Lease on any day during the Related Month;
(b) Monthly Variable Rent. On each Payment Date, the Lessee shall pay
to the Lessor the Monthly Variable Rents that have accrued during the
Related Month with respect to all Vehicles that were leased under the
Operating Lease on any day during the Related Month;
(c) Termination Payments. Casualty Payments and Late Return Payments.
On each Payment Date, the Lessee shall pay to the Lessor all Termination
Payments, Casualty Payments and Late Return Payments as provided in Section
5.4 of the Base Lease; and
(d) Certain Other Payments. The Lessee shall direct all Repurchase
Prices and Disposition Proceeds payable in respect of Acquired Vehicles to
be paid directly to the Master Collateral Agent for the benefit of the
Trustee. The Servicer and the Lessee each agree that in the event that the
Servicer or the Lessee shall receive directly any such payment, including
cash, securities, obligations or other property, the Servicer or the
Lessee, as the case may be, shall accept the same as the Master Collateral
Agent's agent and shall hold the same in trust on behalf of and for the
benefit of the Master Collateral Agent, and shall deposit the same, within
two (2) Business Days after receipt of such property in available funds,
into the Master Collateral Account in the same form received, with the
endorsement of the Servicer or the Lessee, as the case may be, when
necessary or appropriate.
11. Net Lease. THE OPERATING LEASE SHALL BE A NET LEASE, AND THE LESSEE'S
OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE AND
UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR ANY
REASON WHATSOEVER. The obligations and liabilities of the Lessee hereunder shall
in no way be released, discharged or otherwise affected (except as may be
expressly provided herein including, without limitation, the right of the Lessee
to reject Vehicles pursuant to Section 2.2 of the Base Lease) for any reason,
including without limitation: (i) any defect in the condition, merchantability,
quality or fitness for use of the Vehicles or any part thereof; (ii) any damage
to, removal, abandonment, salvage, loss, scrapping or destruction of or any
requisition or taking of the Vehicles or any part thereof; (iii) any
restriction, prevention
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67
or curtailment of or interference with any use of the Vehicles or any part
thereof; (iv) any defect in, or any Lien on, title to the Vehicles or any part
thereof; (v) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of the Lessee or the Lessor;
(vi) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to the Lessee, the
Lessor or any other Person, or any action taken with respect to the Operating
Lease by any trustee or receiver of any Person mentioned above, or by any court;
(vii) any claim that the Lessee has or might have against any Person, including
without limitation the Lessor; (viii) any failure on the part of the Lessor to
perform or comply with any of the terms hereof or of any other agreement; (ix)
any invalidity or unenforceability or disaffirmance of the Operating Lease or
any provision hereof or any of the other Related Documents or any provision of
any thereof, in each case whether against or by the Lessee or otherwise; (x) any
insurance premiums payable by the Lessee with respect to the Vehicles; or (xi)
any other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not the Lessee shall have notice or knowledge of any of the foregoing
and whether or not foreseen or foreseeable. The Operating Lease shall be
noncancelable by the Lessee and, except as expressly provided herein; the
Lessee, to the extent permitted by law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender the Operating
Lease, or to any diminution or reduction of Rent payable by the Lessee
hereunder. All payments by the Lessee made hereunder shall be final (except to
the extent of adjustments provided for herein), absent manifest error and,
except as otherwise provided herein, the Lessee shall not seek to recover any
such payment or any part thereof for any reason whatsoever, absent manifest
error. If for any reason whatsoever the Operating Lease shall be terminated in
whole or in part by operation of law or otherwise except as expressly provided
herein, the Lessee shall nonetheless pay an amount equal to each Rent payment at
the time and in the manner that such payment would have become due and payable
under the terms of the Operating Lease as if it had not been terminated in whole
or in part. All covenants and agreements of the Lessee herein shall be performed
at its cost, expense and risk unless expressly otherwise stated.
12. Liens. Except for Permitted Liens, the Lessee shall keep all Vehicles
leased by it free of all Liens arising during the Term. Upon the Vehicle Lease
Expiration Date for each Vehicle leased hereunder, the Lessor may, in its
discretion, remove any such Lien and any sum of money that May be paid by the
Lessor in release or discharge thereof, including attorneys' fees and costs,
will be paid by the Lessee upon demand by the Lessor. The Lessor may grant
security interests in the Vehicles to the Master Collateral Agent in accordance
with the Master Collateral
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Agency Agreement and the Indenture without consent of the Lessee. The Lessee
acknowledges that the granting of Liens and the taking of other actions pursuant
to the Indenture and the Related Documents does not interfere with the rights of
the Lessee under the Operating Lease.
13. Non-Disturbance. So long as the Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Vehicles will not be
disturbed during the Term subject, however, to paragraph 8 of this Annex A and
except that the Lessor, the Master Collateral Agent and the Trustee each retains
the right, but not the duty, to inspect the Vehicles without disturbing the
ordinary conduct of the Lessee's business. Upon the request of the Lessor, the
Master Collateral Agent or the Trustee, from time to time, the Lessee will make
reasonable efforts to confirm to the Lessor, the Master Collateral Agent and the
Trustee the location, mileage and condition of each Vehicle and to make
available for the Lessor's, the Master Collateral Agent's or the Trustee's
inspection within a reasonable time period, not to exceed forty-five (45) days,
the Vehicles at the location where the Vehicles are normally domiciled. Further,
the Lessee will, during normal business hours and with a notice of three (3)
Business Days, make its records pertaining to the Vehicles available to the
Lessor, the Master Collateral Agent or the Trustee for inspection at the
location where the Lessee's records are normally domiciled.
14. Certain Risks of Loss Borne by Lessee. Upon delivery of each Vehicle to
the Lessee, as between the Lessor and the Lessee, the Lessee assumes and bears
the risk of loss, damage, theft, taking, destruction, attachment, seizure,
confiscation or requisition and all other risks and liabilities with respect to
such Vehicle, including personal injury or death and property damage, arising
with respect to any Vehicle due to the manufacturer, purchase, acceptance,
rejection, delivery, leasing, subleasing, possession, use, inspection,
registration, operation, condition, maintenance, repair or storage of such
Vehicle, howsoever arising.
15. Title. This is an agreement to lease only, and title to the Acquired
Vehicles will at all times remain in the Lessor's name. The Lessee will not have
any rights or interest in such Vehicles whatsoever other than the rights of
possession and use as provided by this Agreement. In addition, the Lessee, by
its execution hereof, acknowledges and agrees that (i) the Lessor is the sole
owner and holder of all right, title and interest in and to the Manufacturer
Programs as they relate to the Vehicles leased hereunder and (ii) the Lessee has
no right, title or interest in any Manufacturer Program as it relates to any
Vehicle leased hereunder. To confirm the foregoing, the Lessee, by its execution
hereof, hereby assigns and transfers to the Lessor any
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rights that the Lessee may have in respect of any Manufacturer Programs as they
relate to the Vehicles leased hereunder.
* * *
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ANNEX B
ANNEX
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of April 30, 1996
between
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
and
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee
71
1. Scope of Annex. This Annex B shall apply only to the acquisition or
financing, leasing and servicing of the Financed Vehicles by the Lessee pursuant
to the Base Lease, as supplemented by this Lease Annex (collectively, the
"Financing Lease It ) .
2. General Agreement. (a) Lessor and Lessee intend (except as explicitly
provided in subparagraph (b) below) that for all purposes (including, but not
limited to, financial accounting, regulatory accounting, federal income tax
purposes and all applicable state and local income, franchise, sales, use and
excise tax purposes and for purposes of any foreign corporation, business
registration or doing business statutes), with respect to the Financed Vehicles,
(A) this Lease will be treated as a financing arrangement, (B) Lessor will be
treated as a lender making loans to Lessee in amounts equal to the Capitalized
Cost of the Financed Vehicles, which loans are secured by the Financed Vehicles,
(c) the Lessee will be treated as making payments of principal and interest
(denominated as Monthly Base Rent and Monthly Supplementary Payments, and
Monthly Finance Rent, respectively) to the Lessor and (D) Lessee will be treated
as the owner of the Financed Vehicles and will be entitled to all tax benefits
ordinarily available to an owner of property similar to the Financed Vehicles
for such tax purposes.
(b) Lessor and Lessee intend that for all purposes (including, but not
limited to, financial accounting, regulatory accounting, federal income tax
purposes and all applicable state and local income, franchise, sales, use and
excise tax purposes and for purposes of any foreign corporation, business
registration or doing business statutes), with respect to the Financed Vehicles,
(A) this Lease, as supplemented by this Lease Annex, will be treated as a
financing arrangement, (B) Lessor will be treated as a lender making loans to
Lessee in amounts equal to the Capitalized Costs of Financed Vehicles, which
loans are secured by the Financed Vehicles, (C) the Lessee will be treated as
making payments of principal and interest (denominated as Monthly Base Rent and
Monthly Supplementary Payments, and Monthly Finance Rent, respectively) to the
Lessor and (D) Lessee will be treated as the owner of the Financed Vehicles and
will be entitled to all tax benefits ordinarily available to an owner of
property similar to the Financed Vehicles for such tax purposes.
3. Financing Lease Commitment. Subject to the terms and conditions of the
Financing Lease, upon execution and delivery of the Financing Lease, the Lessor
shall (i) on the Lease Commencement Date refinance the Refinanced Vehicles in an
amount equal to the aggregate Net Book Value thereof, and (ii) from time to time
on or after the Lease Commencement Date and prior to the Lease Expiration Date
purchase all other Financed Vehicles identified in Vehicle Orders placed by the
Lessee for a purchase
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price equal to the Capitalized Cost thereof, and in each case simultaneously
therewith enter into this Financing Lease with the Lessee with respect to the
Refinanced Vehicles and other Financed Vehicles, as the case may be; provided,
that the aggregate outstanding Base Amount under the Financing Lease shall not
on any date exceed (a) the Maximum Lease Commitment, less (b) the sum of (x) the
sum of the Net Book Values of Acquired Vehicles leased under the Operating Lease
on such date, each such Net Book Value calculated as of the first day contained
within both the calendar month in which such date of determination occurs and
the Vehicle Term for the related Acquired Vehicle, plus (y) accrued and unpaid
Monthly Base Rent under the Operating Lease as of such date.
4. Lease Procedures.
(a) Initial Lease. In connection with the Lease of the Refinanced
Vehicles and any other Financed Vehicles to be leased on the Lease
Commencement Date, to evidence the refinancing of the Refinanced Vehicles
and the acquisition and financing of such other Financed Vehicles by the
Lessor on the Lease Commencement Date and the conveyance on such date of a
security interest in such Financed Vehicles to the Master Collateral Agent,
the Lessee shall deliver to the Lessor on or prior to the Lease
Commencement Date the following:
(i) a schedule concerning the Refinanced Vehicles as specified in
Section 2.1 of the Base Lease, in the case of all Refinanced Vehicles,
or a Vehicle Order (including a Vehicle Acquisition Schedule) with
respect to all other Financed Vehicles to be leased by the Lessor on
the Lease Commencement Date;
(ii) evidence, reasonably satisfactory to the Lessor and the
Trustee that the Lessor has been designated as the Financing Source
and the Trustee has been designated as the Beneficiary under the
Master Collateral Agency Agreement with respect to the Refinanced
Vehicles;
(iii) a fully executed Assignment Agreement with respect to each
related Manufacturer Program; and
(vi) an Officer's Certificate stating that all the conditions
precedent under the Lease to the leasing of such Vehicles on the Lease
Commencement Date have been satisfied.
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(b) Subsequent Leases. In connection with each Lease of a
Financed Vehicle after the Lease Commencement Date, to evidence the
acquisition or financing of such Financed Vehicle by the Lessor and
the conveyance of a security interest in such Financed Vehicles to the
Master Collateral Agent, the Lessee shall deliver to the Lessor a
Vehicle Order (including a Vehicle Acquisition Schedule) with respect
to all Financed Vehicles to be leased by the Lessor on the date
specified therein. The Lessee hereby agrees that each such delivery of
a Vehicle Order shall be deemed hereunder to constitute a
representation and warranty by the Lessee, to and in favor of the
Lessor and the Trustee, that all the conditions precedent to the
acquisition or financing and leasing of the Vehicles identified in
such Vehicle Order have been satisfied as of the date of such Vehicle
Order.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
Financing Lease as it relates to each Financed Vehicle leased hereunder
shall be from the Vehicle Lease Commencement Date to the date that is 60
months from the Vehicle Lease Commencement Date. On the occurrence of such
date, the Lessee shall pay to the Master Collateral Agent or the Trustee,
in accordance with this Financing Lease, any amounts unpaid and owing under
the Lease in respect of such Vehicle.
6. Calculation of Rent and Monthly Supplemental Payment. Rent and the
Monthly Supplemental Payment shall be due and payable on a monthly basis as
set forth in this paragraph 6:
"Monthly Base Rent", with respect to each Payment Date and each
Financed Vehicle leased under the Lease on any day during the Related
Month, shall be the sum of all Depreciation Charges that have accrued
with respect to such Vehicle during the Related Month.
"Monthly Finance Rent", with respect to each Payment Date and
each Financed Vehicle leased under the Lease on any day during the
Related Month, shall equal the sum, without double counting, of (a)
the product of (i) an amount equal to the Net Book Value of such
Financed Vehicle on the first day contained within both the Related
Month and the Vehicle Term with respect to such Vehicle multiplied by
the VFR for the Interest Period ending on the next succeeding Payment
Date and (ii) the quotient obtained by dividing (A) the number of days
contained within both the Related Month and the Vehicle Term with
respect to such Financed Vehicle by (B) the total number of days in
the Related Month, plus (b) the product of (i) an amount equal to all
Carrying Charges for the Related Month, and (ii) the quotient obtained
by dividing the Net Book Value of such Financed Vehicle as of the
first day of the Related Month by the Net
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Book Value of all Vehicles leased under the Lease as of the first day of the
Related Month.
"Monthly Supplemental Payment" with respect to each Payment Date and all
Vehicles that were leased under the Financing Lease on any day during the
Related Month shall be an amount equal to the sum of (i) the aggregate
Termination Values (each as of the date on which such Financed Vehicle is no
longer an Eligible Vehicle, becomes a Casualty or is sold, as applicable) of all
the Financed Vehicles financed under this Finance Lease at any time during such
Related Month that, without double counting, while so financed either are no
longer Eligible Vehicles, have suffered a Casualty or are sold by the Lessee (it
being understood that the Lessee has agreed to sell Financed Vehicles only in a
manner consistent with the provisions hereof and of the Related Documents) to
any Person (including the Lessee) other than to a Manufacturer pursuant to such
Manufacturer's Manufacturer Program or to a third party pursuant to an Auction
conducted through a Manufacturer's Manufacturer Program, in each case, during
the Related Month, plus (ii) the aggregate Termination Values (each as of the
applicable Disposition Date) of all the Financed Vehicles financed under this
Finance Lease that while so financed were returned by the Lessee to a
Manufacturer 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 (iii) any amounts received by the Lessor or the Trustee, or
deposited into the Collection Account, during the Related Month representing (a)
Repurchase Prices for repurchases of Financed Vehicles or (b) the sales proceeds
for sales of Financed Vehicles financed at the time of such sale under this
Finance Lease to a third party other than (1) to a Manufacturer or (2) through
an Auction. Solely for determining the amounts payable hereunder with respect to
a Financed Vehicle that is a Program Vehicle that became a Casualty 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.
"Rent" means Monthly Base Rent plus Monthly Finance Rent.
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7. Payment of Rent and Other Payments. (a) On each Payment Date:
(i) Monthly Base Rent. The Lessee shall pay to the Lessor the Monthly
Base Rents that have accrued during the Related Month with respect to all
Vehicles that were leased under the Finance Lease on any day during the
Related Month.
(ii) Monthly Finance Rent. The Lessee shall pay to the Lessor the
Monthly Finance Rents that have accrued during the Related Month with
respect to all Vehicles that were leased under the Finance Lease on any day
during the Related Month.
(iii) Monthly Supplemental Payment. The Lessee shall pay to the Lessor
the Monthly Supplemental Payment that has accrued during the Related Month
with respect to all Vehicles that were leased under the Finance Lease on
any day during the Related Month; provided, however, that in the event that
the Monthly Supplemental Payment accrued during a Related Month is a
negative dollar amount, such amount may be netted against other payments to
be paid on such Payment Date pursuant to this paragraph 7.
(b) On the expiration of the term of the Lease with respect to a Financed
Vehicle, any remaining Base Amount, plus all other amounts payable by the Lessee
under the Financing Lease with respect to such Vehicle shall be immediately due
and payable.
(c) The Lessee may from time to time prepay the Base Amount of the
Financing Lease with respect to a Financed Vehicle, in whole or in part, on any
date, provided that the Lessee shall give the Lessor and the Trustee not less
than one (1) Business Day's prior notice of any prepayment, specifying the date
and amount of such prepayment, and the Financed Vehicles to which such
prepayment relates.
8. Risk of Loss Borne by Lessee. Upon delivery of each Vehicle to the
Lessee, as between the Lessor and the Lessee, the Lessee assumes and bears the
risk of loss, damage, theft, taking, destruction, attachment, seizure,
confiscation or requisition with respect to such Vehicle, however caused or
occasioned, and all other risks and liabilities, including personal injury or
death and property damage, arising with respect to any Vehicle or the
manufacture, purchase, acceptance, rejection, ownership, delivery, leasing,
subleasing, possession, use, inspection, registration, operation, condition,
maintenance, repair, storage, sale, return or other disposition of such Vehicle,
howsoever arising.
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9. Mandatory Repurchase of Texas Vehicles. Prior to the Vehicle Lease
Expiration Date with respect to each Texas Vehicle (other than a Vehicle Lease
Expiration Date arising in connection with the purchase of such Texas Vehicle
pursuant to this paragraph 9) and, in the case of each Texas Vehicle which is a
Program Vehicle, prior to the expiration of the Repurchase Period applicable
thereto (unless such Vehicle has been redesignated as a Non-Program Vehicle in
accordance with Section 14 of the Base Lease), the Lessee shall purchase such
Texas Vehicle (including any such Vehicle which has become a Casualty) at a
purchase price equal to the Net Book Value of such Vehicle calculated as of the
date of purchase (or, in the case of a Casualty, at a purchase price equal to
the Monthly Supplemental Payments accruing in respect of such Casualty during
the Related Month in which such Vehicle became a Casualty), which shall be
payable to the Master Collateral Agent (together with all accrued and unpaid
Rent and other payments due and payable on such Payment Date with respect to
such Texas Vehicle through the date of such purchase) on or prior to the Payment
Date next succeeding such purchase by the Lessee. Upon receipt of such purchase
price by the Lessor or the Master Collateral Agent, the Lessor shall cause title
to each Texas Vehicle to be transferred to the Lessee, the lien of the Master
Collateral Agent in such Texas Vehicle will automatically be released and the
Servicer shall cause the Master Collateral Agent to cause the notation of its
lien to be removed from the Certificate of Title for such Vehicle, concurrently
with or promptly after such purchase price for such Texas Vehicle (and any such
unpaid Rent and payments) is paid by the Lessee to the Master Collateral Agent.
Notwithstanding anything to the contrary in this Agreement, no Texas Vehicle may
be sold or otherwise disposed of (other than pursuant to Section 17.3 of the
Base Lease), including at Auction or by return to its Manufacturer pursuant to a
Manufacturer Program, prior to its purchase by the Lessee pursuant to and in
accordance with this paragraph 9.
***
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