MASTER MOTOR VEHICLE OPERATING LEASE AGREEMENT
dated as of July 30, 1997
among
AESOP LEASING CORP. II,
as Xxxxxx,
XXXX RENT A CAR SYSTEM, INC.,
as Lessee and as Administrator,
and
AVIS RENT A CAR, INC.,
as Guarantor
AS SET FORTH IN SECTION 27 HEREOF, LESSOR HAS ASSIGNED TO AFC-II (AS DEFINED
HEREIN) AND AFC-II 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.
[THIS IS NOT COUNTERPART NO. 1]
TABLE OF CONTENTS
Page
1. DEFINITIONS..................................................... 1
2. GENERAL AGREEMENT............................................... 1
2.1. Lease and Acquisition of Vehicles......................... 4
2.2. Right of Lessees and Guarantor to Act as Lessor's
Agent..................................................... 5
2.3. Payment of Capitalized Cost or Net Book Value by
Lessor.................................................... 6
2.4. Non-Liability of Lessor................................... 6
2.5. Lessees' Rights to Purchase Vehicles...................... 6
2.6. Lessor's Right to Cause Vehicles to be Sold............... 7
2.7. Limitations on the Acquisition of Certain Vehicles........ 8
3. TERM ................................................................ 9
3.1 Vehicle Term.............................................. 9
3.2. Term ..................................................... 10
4. RENT AND CHARGES..................................................... 10
4.1. Payment of Rent........................................... 10
4.2. [RESERVED]................................................ 11
4.3. Net Lease................................................. 11
5. INSURANCE............................................................ 12
5.1. Personal Injury and Damage................................ 12
5.2. Delivery of Certificate of Insurance...................... 12
5.3. Changes in Insurance Coverage............................. 12
6. RISK OF LOSS; CASUALTY AND INELIGIBLE VEHICLE OBLIGA-
TIONS........................................................... 13
6.1. Risk of Loss Borne by Lessees............................. 13
6.2. Casualty; Ineligible Vehicles............................. 13
7. VEHICLE USE.......................................................... 14
8. LIENS................................................................ 15
9. NON-DISTURBANCE...................................................... 15
10. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND
FINES........................................................... 16
11. MAINTENANCE AND REPAIRS......................................... 16
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12. VEHICLE WARRANTIES.............................................. 17
12.1. No Lessor Warranties..................................... 17
12.2. Manufacturer's Warranties................................ 17
13. VEHICLE USAGE GUIDELINES AND RETURN; SPECIAL DEFAULT
PAYMENTS; EARLY TERMINATION PAYMENTS............................ 18
13.1. Usage.................................................... 18
13.2. Return................................................... 18
13.3. Special Default Payments................................. 18
13.4. Early Termination Payments............................... 19
14. DISPOSITION PROCEDURE............................................... 19
15. ODOMETER DISCLOSURE REQUIREMENT..................................... 19
16. GENERAL INDEMNITY................................................... 19
16.1. Indemnity by the Lessees and the Guarantor............... 19
16.2. Reimbursement Obligation by the Lessees and the
Guarantor................................................ 22
16.3. Defense of Claims........................................ 23
17. ASSIGNMENT.......................................................... 24
17.1. Right of the Lessor to Assign this Agreement............. 24
17.2. Limitations on the Right of the Lessees to
Assign this Agreement................................. 24
18. DEFAULT AND REMEDIES THEREFOR....................................... 25
18.1. Events of Default........................................ 25
18.2. Effect of AESOP II Operating Lease Event of De-
fault or Liquidation Event of Default.................... 26
18.3. Rights of Lessor Upon AESOP II Operating Lease
Event of Default, Limited Liquidation Event of
Default or Liquidation Event of Default.................. 27
18.4. Rights of Lender and Trustee Upon Liquidation
Event of Default, Limited Liquidation Event of
Default and Non-Performance of Certain Covenants......... 28
18.5. Measure of Damages....................................... 30
18.6. Vehicle Return Default................................... 31
18.7. Application of Proceeds.................................. 33
19. MANUFACTURER EVENTS OF DEFAULT...................................... 33
20. [RESERVED].......................................................... 33
21. [RESERVED].......................................................... 33
22. CERTIFICATION OF TRADE OR BUSINESS USE.............................. 33
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23. SURVIVAL............................................................ 34
24. ADDITIONAL LESSEES.................................................. 34
25. TITLE............................................................... 37
26. GUARANTY............................................................ 37
26.1. Guaranty................................................. 37
26.2. Scope of Guarantor's Liability........................... 37
26.3. Lessor's Right to Amend this Agreement, Etc.............. 38
26.4. Waiver of Certain Rights by Guarantor.................... 38
26.5. [RESERVED]............................................... 40
26.6. Guarantor to Pay Lessor's Expenses....................... 40
26.7. Reinstatement............................................ 40
26.8. Pari Passu Indebtedness.................................. 40
27. RIGHTS OF LESSOR ASSIGNED TO TRUSTEE................................ 40
28. [RESERVED]...................................................... 42
29. MODIFICATION AND SEVERABILITY....................................... 42
30. CERTAIN REPRESENTATIONS AND WARRANTIES.......................... 42
30.1. Organization; Ownership; Power; Qualification............ 43
30.2. Authorization; Enforceability............................ 43
30.3. Compliance............................................... 43
30.4. Financial Information; Financial Condition............... 44
30.5. Litigation............................................... 45
30.6. Liens.................................................... 45
30.7. Employee Benefit Plans................................... 45
30.8. Investment Company Act................................... 45
30.9. Regulations G, T, U and X................................ 46
30.10. Business Locations; Trade Names; Principal
Places of Business Locations............................ 46
30.11. Taxes................................................... 46
30.12. Governmental Authorization.............................. 47
30.13. Compliance with Laws.................................... 47
30.14. Eligible Vehicles....................................... 47
30.15. Supplemental Documents True and Correct................. 47
30.16. Manufacturer Programs................................... 47
30.17. Absence of Default...................................... 47
30.18. Title to Assets......................................... 48
30.19. Burdensome Provisions................................... 48
30.20. No Adverse Change....................................... 48
30.21. No Adverse Fact......................................... 48
30.22. Accuracy of Information................................. 49
30.23. Solvency................................................ 49
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31. CERTAIN AFFIRMATIVE COVENANTS....................................... 49
31.1. Corporate Existence; Foreign Qualification............... 50
31.2. Books, Records and Inspections........................... 50
31.3. Insurance................................................ 50
31.4. Manufacturer Programs.................................... 51
31.5. Reporting Requirements................................... 51
31.6. Payment of Taxes; Removal of Liens....................... 53
31.7. Business................................................. 53
31.8. Maintenance of Separate Existence........................ 53
31.9. Trustee as Lienholder.................................... 54
31.10. Maintenance of the Vehicles............................. 54
31.11. Enhancement............................................. 54
31.12. Manufacturer Payments................................... 54
31.13. Accounting Methods; Financial Records................... 55
31.14. Disclosure to Auditors.................................. 55
32. CERTAIN NEGATIVE COVENANTS.......................................... 55
32.1. Mergers, Consolidations.................................. 55
32.2. Other Agreements......................................... 55
32.3. Liens ................................................... 56
32.4. Use of Vehicles.......................................... 56
32.5. Termination of Agreement................................. 56
33. ADMINISTRATOR ACTING AS AGENT OF THE LESSOR......................... 56
34. NO PETITION......................................................... 56
35. SUBMISSION TO JURISDICTION.......................................... 57
36. GOVERNING LAW....................................................... 57
37. JURY TRIAL.......................................................... 58
38. NOTICES............................................................. 58
39. LIABILITY........................................................... 59
40. TITLE TO MANUFACTURER PROGRAMS IN LESSOR............................ 59
41. HEADINGS............................................................ 59
42. EXECUTION IN COUNTERPARTS........................................... 59
43. EFFECTIVENESS. ..................................................... 59
44. NO RECOURSE......................................................... 59
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SCHEDULES AND ATTACHMENTS
Schedule 30.5 Litigation
Schedule 30.10 Business Locations
Schedule 30.13 Compliance with Law
ATTACHMENT A Information relating to Initial Leased Vehicles
ATTACHMENT B Vehicle Acquisition Schedule and Related Information
ATTACHMENT C Form of Power of Attorney
ATTACHMENT D Form of Joinder in Lease
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MASTER MOTOR VEHICLE OPERATING LEASE AGREEMENT
This Master Motor Vehicle Operating Lease Agreement (this
"Agreement"), dated as of July 30, 1997, by and among AESOP LEASING CORP. II, a
Delaware corporation (the "Lessor"), AVIS RENT A CAR SYSTEM, INC., a Delaware
corporation ("ARAC"), individually and as the Administrator, Eligible Rental
Car Companies that become party to this Agreement pursuant to the provisions of
Section 24 hereof (individually, ARAC and each such Eligible Rental Car
Company, a "Lessee" and, collectively, the "Lessees"), and AVIS RENT A CAR,
INC., a Delaware corporation, as guarantor (the "Guarantor").
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) has purchased or will purchase Program Vehicles of one or more
Manufacturers with proceeds provided to the Lessor by the Lender pursuant to
the AESOP II Loan Agreement and other available funds;
WHEREAS, the Lessor desires to lease to the Lessees and the Lessees
desire to lease from the Lessor Program Vehicles financed by the Lessor with
the proceeds of Loans and other available funds for use in the daily rental car
businesses of the Lessees; and
WHEREAS, the Guarantor has, pursuant to Section 26 hereof, guaranteed
the obligations of the Lessees under this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. Unless specified herein, capitalized terms used herein
(including the preamble and recitals hereto) shall have the meanings ascribed
to such terms in the Definitions List attached as Schedule I to the Base
Indenture, dated as of July 30, 1997 (the "Base Indenture"), between AFC-II, as
Issuer, and Xxxxxx Trust and Savings Bank, as Trustee.
2. GENERAL AGREEMENT. (a) Each Lessee and the Lessor intend that this
Agreement is a lease and that the relationship between the Lessor and each
Lessee pursuant hereto shall always
be only that of lessor and lessee, and each Lessee hereby declares,
acknowledges and agrees that the Lessor is the owner of, and the Lessor or its
Permitted Nominee holds legal title to, the Vehicles. No Lessee shall acquire
by virtue of this Agreement any right, equity, title or interest in or to any
Vehicles, except the right to use the same under the terms hereof. The parties
agree that this Agreement is a "true lease" and agree to treat this Agreement
as a lease for all purposes, including tax, accounting and otherwise and each
party hereto will take no position on its tax returns and filings contrary to
the position that the Lessor is the owner of the Vehicles for U.S. federal
income tax purposes.
(b) If, notwithstanding the intent of the parties to this Agreement,
this Agreement is characterized by any third party as a financing arrangement
or as otherwise not constituting a "true lease," then it is the intention of
the parties that this Agreement shall constitute a security agreement under
applicable law, and, to secure all of its obligations under this Agreement,
each Lessee hereby grants to the Lessor a security interest in all of such
Lessee's right, title and interest, if any, in and to all of the following
assets, property and interests in property, whether now owned or hereafter
acquired or created:
(i) the rights of such Lessee under this Agreement, as same
may be amended, modified or supplemented from time to time in
accordance with its terms, and any other agreements related to or in
connection with this Agreement to which the Lessees are a party (the
"Lessee Agreements"), including, without limitation, (a) all monies,
if any, due and to become due to such Lessee from the Guarantor and
any other Lessee under or in connection with any of the Lessee
Agreements, whether payable as rent, guaranty payments, fees,
expenses, costs, indemnities, insurance recoveries, damages for the
breach of any of the Lessee Agreements or otherwise, (b) all rights,
remedies, powers, privileges and claims of such Lessee against any
other party under or with respect to the Lessee Agreements (whether
arising pursuant to the terms of such Agreements or otherwise
available to such Lessee at law or in equity), including the right to
enforce any of the Lessee Agreements and to give or withhold any and
all consents, requests, notices, directions, approvals, extensions or
waivers under or with respect to the Lessee Agreements or the
obligations and liabilities of any party thereunder, (c) all liens and
property from time to time purporting to secure payment of the
obligations and liabilities of such Lessee arising under or in
connection with the Lessee Agree-
2
ments, and any documents or agreements describing any collateral
securing such obligations or liabilities and (d) all guarantees,
insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such obligations
and liabilities of such Lessee pursuant to the Lessee Agreements;
(ii) all Vehicles leased by such Lessee from the Lessor under
this Agreement which, notwithstanding that this Agreement is intended
to convey only a leasehold interest, are determined to be owned by
such Lessee, and all Certificates of Title with respect to such
Vehicles;
(iii) all right, title and interest of such Lessee in, to and
under any Manufacturer Programs, including any amendments thereof, and
all monies due and to become due thereunder, in each case in respect
of Vehicles leased by such Lessee which, notwithstanding that this
Agreement is intended to convey only a leasehold interest, are
determined to be owned by such Lessee, whether payable as Vehicle
repurchase prices, auction sales proceeds, fees, expenses, costs,
indemnities, insurance recoveries, damages for breach of the
Manufacturer Programs or otherwise (but excluding all incentive
payments payable to such Lessee or the Lessor in respect of purchases
of vehicles under the Manufacturer Programs) and all rights to compel
performance and otherwise exercise remedies thereunder;
(iv) all payments under insurance policies (whether or not
the Lessor, the Lender or the Trustee is named as the loss payee
thereof) or any warranty payable by reason of loss or damage to, or
otherwise with respect to, any of the Vehicles leased by such Lessee;
(v) all additional property that may from time to time
hereafter be subjected to the grant and pledge under this Agreement,
as same may be modified or supplemented from time to time, by such
Lessee or by anyone on its behalf; and
(vi) all proceeds of any and all of the foregoing including,
without limitation, payments under insurance (whether or not the
Lessor is named as the loss payee thereof) and cash.
(c) To secure the AFC-II Obligations, each Lessee hereby grants to the
Trustee, on behalf of the Secured Parties, a first priority security interest
in all of such Lessee's right, title
3
and interest, if any, in and to all of the collateral described in Section 2(b)
above, whether now owned or hereafter acquired or created; provided, however,
that in no event shall the Trustee's claim against such collateral exceed the
outstanding obligations of the Lessor to the Lender under the AESOP II Loan
Agreement. Upon the occurrence of a Liquidation Event of Default or a Limited
Liquidation Event of Default and subject to the provisions of the Related
Documents and the proviso contained in the immediately preceding sentence, the
Trustee shall have all of the rights and remedies of a secured party,
including, without limitation, the rights and remedies granted under the
Uniform Commercial Code.
(d) Each Lessee agrees to deliver to the Lessor, the Lender and the
Trustee on or before the Initial Closing Date:
(i) a written search report from a Person satisfactory to the
Lessor, the Lender and the Trustee listing all effective financing
statements that name such Lessee as debtor or assignor, and that are
filed in the jurisdictions in which filings were made pursuant to
clause (ii) below, together with copies of such financing statements,
and tax and judgment lien search reports from a Person satisfactory to
the Lessor, the Lender and the Trustee showing no evidence of liens
filed against such Lessee that purport to affect any Vehicles leased
hereunder or any Collateral under the Base Indenture;
(ii) evidence of the filing of proper financing statements on
Form UCC-1 naming such Lessee, as debtor, and the Lessor as secured
party covering the collateral described in Section 2(b) hereof; and
(iii) evidence of the filing in the states in which such
Lessee conducts business of proper financing statements on Form UCC-1
naming such Lessee, as debtor, and the Trustee as secured party
covering the collateral described in Section 2(b) hereof.
(e) Only Vehicles that are Program Vehicles shall be eligible to be
leased by the Lessor to the Lessees hereunder. All references in this Agreement
to "Vehicle" or "Vehicles" (other than such references in the recitals hereto)
shall refer to a Program Vehicle or Program Vehicles, respectively.
4
2.1. Lease and Acquisition of Vehicles. From time to time, subject to
the terms and provisions hereof, the Lessor agrees to lease to each Lessee and
such Lessee agrees to lease from the Lessor, subject to the terms hereof, (i)
the new Vehicles identified in Vehicle orders (each such vehicle order, a
"Vehicle Order") placed by each Lessee, pursuant to the terms of the
Manufacturer Programs and (ii) the Vehicles identified in Attachment A hereto
containing information concerning the Initial AESOP Vehicles leased by ARAC
under this Agreement (the "Initial Leased Vehicles") of a scope agreed upon by
ARAC and the Lessor (including, at a minimum, the Net Book Value (as of the
first day of the Related Month in which the Initial Closing Date occurs) of
each of the Initial Leased Vehicles). If requested by the Lessor, each Lessee
shall make each Vehicle Order with respect to each Vehicle leased by such
Lessee available to the Lessor, together with a schedule containing the
information with respect to such Vehicles included within such Vehicle Order as
is set forth in Attachment B hereto (each, a "Vehicle Acquisition Schedule"),
or in such form as is otherwise requested by the Lessor. In addition, each
Lessee agrees to provide such other information regarding such Vehicles as the
Lessor may require from time to time, including on the Initial Closing Date, in
the case of the Initial Leased Vehicles, such information as may be required to
determine the monthly Depreciation Charges applicable to such 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 Lessees.
2.2. Right of Lessees and Guarantor to Act as Lessor's Agent. The
Lessor agrees that each Lessee and the Guarantor 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; provided, however, that the Lessor may hold a
Lessee or the Guarantor liable for losses due to such Lessee's or the
Guarantor's actions, or failure to act, in performing as the Lessor's agent in
accordance with the terms hereof. In addition, the Lessor agrees that each
Lessee may make arrangements for delivery of Vehicles leased by such Lessee to
a location selected by such Lessee at its expense. Each Lessee agrees to accept
Vehicles leased by such Lessee as produced and delivered except each Lessee
will have the option to reject any such Vehicle that may be rejected pursuant
to the terms of the applicable Manufacturer Program. Each Lessee, acting as
agent for the Lessor, shall be responsible for pursuing any rights of the
Lessor with
5
respect to the return of any Vehicle leased by such Lessee to the Manufacturer
pursuant to the preceding sentence. Each of the Lessees and the Guarantor agree
that all Vehicles ordered as provided herein shall be ordered utilizing the
procedures consistent with an Eligible Manufacturer Program.
2.3. Payment of Capitalized Cost or Net Book Value by Lessor. On the
AESOP II Operating Lease Commencement Date, the Lessor shall pay to Original
AESOP an amount equal to the aggregate Net Book Value (as of the first day of
the Related Month) of the Initial Leased Vehicles. Upon delivery of any
Vehicle, the Lessor shall pay to the authorized dealer, if any, that sold such
Vehicle to the Lessor, the Capitalized Cost for such Vehicle and the Lessee
leasing such Vehicle shall pay all applicable costs and expenses of freight,
packing, handling, storage, shipment and delivery of such Vehicle, and sales
and use tax (if any), to the extent that the same have not been included in the
Capitalized Cost for such Vehicle.
2.4. Non-Liability of Lessor. The Lessor shall not be liable to any
Lessee for any failure or delay in obtaining Vehicles or making delivery
thereof. AS BETWEEN THE LESSOR AND EACH LESSEE, ACCEPTANCE FOR LEASE OF THE
VEHICLES LEASED BY SUCH LESSEE SHALL CONSTITUTE SUCH LESSEE'S ACKNOWLEDGMENT
AND AGREEMENT THAT SUCH LESSEE HAS FULLY INSPECTED SUCH VEHICLES, THAT SUCH
VEHICLES ARE IN GOOD ORDER AND CONDITION AND ARE OF THE MANUFACTURE, DESIGN,
SPECIFICATIONS AND CAPACITY SELECTED BY SUCH LESSEE, THAT SUCH LESSEE IS
SATISFIED THAT THE SAME ARE SUITABLE FOR THIS USE AND THAT THE LESSOR IS NOT A
MANUFACTURER OR ENGAGED IN THE SALE OR DISTRIBUTION OF VEHICLES, AND HAS NOT
MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATION, WARRANTY OR COVENANT WITH
RESPECT TO MERCHANTABILITY, CONDITION, QUALITY, DURABILITY OR SUITABILITY OF
SUCH VEHICLE IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES OR USES
OF SUCH LESSEE, OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND
OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT THERETO. 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 RESULTING FROM ANY DEFECT IN OR ANY THEFT, DAMAGE, LOSS OR
FAILURE OF ANY VEHICLE, AND THERE SHALL BE NO ABATEMENT OF MONTHLY BASE RENT,
SUPPLEMENTAL RENT OR OTHER AMOUNTS PAYABLE HEREUNDER BECAUSE OF THE SAME.
6
2.5. Lessees' Rights to Purchase Vehicles. Each Lessee shall have the
option, exercisable with respect to any Vehicle during the Vehicle Term with
respect to such Vehicle, to purchase any Vehicle leased by such Lessee at the
greater of (i) the Termination Value or (ii) the Market Value of such Vehicle
(the greater of such amounts being referred to as the "Vehicle Purchase
Price"), in which event such Lessee will pay the Vehicle Purchase Price to the
Lessor on or before the Payment Date with respect to the Related Month in which
such Lessee elects to purchase such Vehicle and such Lessee will pay on or
before such Payment Date all accrued and unpaid Monthly Base Rent and any
Supplemental Rent then due and payable with respect to such Vehicle through
such Payment Date. The Lessor shall cause title to any such Vehicle to be
transferred to the relevant Lessee and the Administrator shall request the
Trustee to cause 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 such unpaid Monthly Base Rent and Supplemental Rent) is
deposited in the Collection Account.
2.6. Lessor's Right to Cause Vehicles to be Sold. If a Lessee does not
elect to purchase any Vehicle leased by such Lessee hereunder pursuant to
Section 2.5 hereof:
(a) Notwithstanding anything to the contrary contained
herein, the Lessor shall have the right, at any time following the date ninety
(90) days prior to the expiration of the Maximum Term, to require that the
Lessee leasing such Vehicle from the Lessor hereunder or another Person
designated by the Lessor, which Person's compensation will be payable solely
from the proceeds from the sale of such Vehicle, exercise commercially
reasonable efforts to arrange for the sale of such Vehicle to a third party for
the Vehicle Purchase Price with respect to such Vehicle, in which event such
Lessee or such other designated Person shall, until not later than the date
thirty (30) days prior to the expiration of such Maximum Term, exercise
commercially reasonable efforts to arrange for the sale of such Vehicle to a
third party for a price (as reduced by the amount of compensation to be paid to
any such other designated Person) equal to or greater than the Termination
Value thereof. If a sale of such Vehicle is arranged by such Lessee or such
other designated Person prior to such date thirty (30) days prior to the
expiration of such Maximum Term, then (i) such Lessee or such other designated
Person shall deliver such Vehicle to the purchaser thereof, (ii) such Lessee or
such other designated Person shall cause to be delivered to the Lessor the
funds paid for such Vehicle by the purchaser and (iii) the Administrator shall
7
request the Trustee to cause its Lien to be removed from the Certificate of
Title for such Vehicle. If such Lessee or such other designated Person is
unable to arrange for a sale of such Vehicle prior to such date thirty (30)
days prior to the expiration of such Maximum Term, then such Lessee or such
other designated Person shall cease attempting to arrange for such a sale and
such Lessee shall return such Vehicle, if a Manufacturer Event of Default has
not occurred, to the applicable Manufacturer as herein provided.
(b) The Lessor shall have the right at any time to request any Lessee
to permit a Vehicle being leased to such Lessee hereunder to be sold to a third
party and, if such Lessee is willing in its sole discretion to forego further
use of such Vehicle, such Lessee shall exercise commercially reasonable efforts
to arrange for the sale of such Vehicle to a third party for a price equal to
or greater than the Termination Value thereof. If a sale of a Vehicle leased by
a Lessee hereunder is arranged by such Lessee pursuant to this Section 2.6(b),
then (i) such Lessee shall deliver such Vehicle to the purchaser thereof, (ii)
such Lessee shall cause to be delivered to the Lessor the funds paid for such
Vehicle by the purchaser and (iii) the Administrator shall request the Trustee
to cause its Lien to be removed from the Certificate of Title for such Vehicle.
(c) In no event may any Vehicle be sold pursuant to this Section 2.6
unless the funds to be paid to the Lessor arising out of such sale (as reduced
by the amount of compensation to be paid to any such other designated Person)
equal or exceed the Termination Value of such Vehicle.
2.7. Limitations on the Acquisition of Certain Vehicles. Unless
otherwise specified in a Supplement or unless waived by the Required
Noteholders as specified in a Supplement, (a) the aggregate Net Book Value of
all Vehicles (or such portion thereof as is specified in such Supplement)
manufactured by a particular Manufacturer or group of Manufacturers and leased
under the Leases (after giving effect to the inclusion of such Vehicle under
this Agreement) as of such date shall not exceed any applicable Maximum
Manufacturer Amount, (b) the aggregate Net Book Value of all Vehicles (or such
portion thereof as is specified in such Supplement) titled in the States of
Ohio, Oklahoma and Nebraska and leased under this Agreement (after giving
effect to the inclusion of such Vehicle under this Agreement) and the AESOP I
Operating Lease as of such date shall not exceed any applicable Maximum
Specified States Amount and (c) after giving effect to the inclusion of such
Vehicle under this Agreement,
8
there shall not be a failure or violation of any other conditions, requirements
or restrictions with respect to the leasing of Eligible Vehicles under this
Agreement as is specified in any Supplement.
3. TERM.
3.1. Vehicle Term. (a) The "Vehicle Operating Lease Commencement Date"
(x) for each Initial Leased Vehicle shall mean the Initial Closing Date and (y)
for each other Vehicle shall mean the day as referenced in the Vehicle
Acquisition Schedule with respect to such Vehicle but in no event shall such
date be a date later than the date that funds are expended or allocated by the
Lessor to acquire such Vehicle. The "Vehicle Term" with respect to each Vehicle
shall extend from the Vehicle Operating Lease Commencement Date through the
earliest of (i) the Turnback Date for such Vehicle, (ii) if such Vehicle is
sold to a third party (other than through an auction conducted by or through or
arranged by the Manufacturer pursuant to its Manufacturer Program), the date on
which such funds in respect of such sale are deposited in the Collection
Account (by such third party or by the applicable Lessee or the Guarantor on
behalf of such third party) and such funds equal or exceed the Termination
Value of such Vehicle, (iii) if such Vehicle becomes a Standard Casualty or an
Ineligible Vehicle, the date funds in the amount of the Termination Value
thereof are deposited in the Collection Account by the applicable Lessee, (iv)
the date that the Vehicle is purchased by the applicable Lessee pursuant to
Section 2.5 hereof and the Vehicle Purchase Price with respect to such purchase
(and any unpaid Monthly Base Rent and Supplemental Rent with respect to such
Vehicle) is deposited in the Collection Account by such Lessee and (v) the date
that is the last Business Day of the month that is 18 months after the month in
which the Vehicle Operating Lease Commencement Date occurs with respect to such
Vehicle (the earliest of such five dates being referred to as the "Vehicle
Operating Lease Expiration Date").
(b) Subject to the provisions of Sections 2.5 and 2.6, each Lessee
shall use its commercially reasonable efforts to return each Vehicle leased by
such Lessee hereunder to the related Manufacturer (or such Manufacturer's agent
or as otherwise directed by such Manufacturer in accordance with such
Manufacturer Program) (a) not prior to the end of the minimum holding period
specified in the related Manufacturer Program (prior to which the Lessor may
not return such Vehicle without penalty (the "Minimum Term")) and (b) not later
than the end of the maximum holding period (after which the Lessor may not
return such
9
Vehicle without penalty (the "Maximum Term")); provided, however, that each
Lessee shall in any case return each Vehicle leased by such Lessee hereunder to
the related Manufacturer (or such Manufacturer's agent or as otherwise directed
by such Manufacturer in accordance with such Manufacturer Program) on or before
the Vehicle Operating Lease Expiration Date with respect to such Vehicle
pursuant to Section 13.2 hereof. The Lessee of any Vehicles returned before the
Minimum Term will pay the equivalent of the Monthly Base Rent with respect to
such Vehicle for the Minimum Term plus any early turn back surcharges payable
by the Lessor or deductible from the Repurchase Price of such Vehicle,
regardless of actual usage, unless such Vehicle is a Standard Casualty or
becomes an Ineligible Vehicle, in which case, the disposition of such Vehicle
will be handled in accordance with Section 6 hereof.
3.2. Term. The "AESOP II Operating Lease Commencement Date" shall mean
the Initial Closing Date. The "AESOP II Operating Lease Expiration Date" shall
mean the latest of (i) the date of the payment in full of all Loans (including
any Loan Interest thereon) the proceeds of which were used by the Lessor to
finance the purchase of Vehicles subject to this Agreement, (ii) the Vehicle
Operating Lease Expiration Date for the last Vehicle leased by any Lessee
hereunder and (iii) the date on which all amounts payable hereunder and under
the Loan Agreements have been paid in full. The "Term" of this Agreement shall
mean the period commencing on the AESOP II Operating Lease Commencement Date
and ending on the AESOP II Operating Lease Expiration Date.
4. RENT AND CHARGES. Each Lessee will pay Monthly Base Rent and any
Supplemental Rent due and payable on a monthly basis as set forth in this
Section 4.
4.1. Payment of Rent. On each Payment Date each Lessee shall pay in
immediately available funds to the Lessor not later than 11:00 a.m. New York
City time, on such Payment Date, such Lessee's allocable portion of (i) all
Monthly Base Rent that has accrued during the Related Month with respect to
each Vehicle leased hereunder during or prior to the Related Month and (ii) all
Supplemental Rent due and payable on such Payment Date. The portion of Monthly
Base Rent allocable to each Lessee will equal (i) with respect to the amounts
described in clause (b) of the definition of Monthly Base Rent, the portion
thereof that relates to the particular Vehicles leased hereunder by such Lessee
and (ii) with respect to other amounts included in the definition of Monthly
Base Rent, such Lessee's Share, determined as of the beginning of the Related
Month, of such amounts. The portion of
10
Supplemental Rent allocable to each Lessee will equal (i) with respect to
Supplemental Rent that relates to particular Vehicles, the portion thereof that
relates to the particular Vehicles leased hereunder by such Lessee and (ii)
with respect to Supplemental Rent that does not relate to particular Vehicles,
such Lessee's Share, determined as of the beginning of the Related Month, of
such amounts.
4.2. [RESERVED].
4.3. Net Lease. THIS AGREEMENT SHALL BE A NET LEASE, AND EACH LESSEE'S
OBLIGATION TO PAY ALL MONTHLY BASE RENT, SUPPLEMENTAL RENT AND OTHER SUMS
HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY
ABATEMENT, SETOFF, COUNTERCLAIM, DEDUCTION OR REDUCTION FOR ANY REASON
WHATSOEVER. The obligations and liabilities of each Lessee hereunder shall in
no way be released, discharged or otherwise affected (except as may be
expressly provided herein including, without limitation, the right of each
Lessee to reject Vehicles pursuant to Section 2.2 hereof) for any reason,
including without limitation: (i) any defect in the condition, merchantability,
quality or fitness for use of the Vehicles or any part thereof; (ii) any damage
to, removal, abandonment, salvage, loss, scrapping or destruction of or any
requisition or taking of the Vehicles or any part thereof; (iii) any
restriction, prevention or curtailment of or interference with any use of the
Vehicles or any part thereof; (iv) any defect in or any Lien on title to the
Vehicles or any part thereof; (v) any change, waiver, extension, indulgence or
other action or omission in respect of any obligation or liability of such
Lessee or the Lessor; (vi) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to such Lessee, the Lessor or any other Person, or any action taken
with respect to this Agreement by any trustee or receiver of any Person
mentioned above, or by any court; (vii) any claim that such Lessee has or might
have against any Person, including without limitation the Lessor; (viii) any
failure on the part of the Lessor or any other Lessee to perform or comply with
any of the terms hereof or of any other agreement; (ix) any invalidity or
unenforceability or disaffirmance of this Agreement or any provision hereof or
any of the other Related Documents or any provision of any thereof, in each
case whether against or by such Lessee or otherwise; (x) any insurance premiums
payable by such Lessee with respect to the Vehicles; or (xi) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not such Lessee shall have notice or knowledge of any of the foregoing and
whether or not foreseen or foreseeable. This Agreement shall be
11
noncancelable by the Lessees and, except as expressly provided herein, each
Lessee, to the extent permitted by law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this
Agreement, or to any diminution or reduction of Monthly Base Rent, Supplemental
Rent or other amounts payable by such Lessee hereunder. All payments by each
Lessee made hereunder shall be final (except to the extent of adjustments
provided for herein), absent manifest error and, except as otherwise provided
herein, each 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 this Agreement shall be terminated in whole or in part by operation
of law or otherwise except as expressly provided herein, each Lessee shall
nonetheless pay an amount equal to such Lessee's allocable portion of all
Monthly Base Rent, all Supplemental Rent and all other amounts due hereunder at
the time and in the manner that such payments would have become due and payable
under the terms of this Agreement as if it had not been terminated in whole or
in part. All covenants and agreements of each Lessee herein shall be performed
at its cost, expense and risk unless expressly otherwise stated.
5. INSURANCE. Each Lessee represents that it shall at all times
maintain or cause to be maintained insurance coverage in force as follows:
5.1. Personal Injury and Damage. Insurance coverage as set forth in
Section 31.3 hereof. In addition, each Lessee will maintain with respect to
each Lessee's properties and businesses insurance against loss or damage of the
kind customarily insured against by corporations engaged in the same or similar
businesses, of such types and in such amounts as are customarily carried by
such similarly situated corporations.
5.2. Delivery of Certificate of Insurance. Within 10 days after the
Initial Closing Date (or, with respect to any additional party becoming a
"Lessee" hereunder pursuant to the provisions of Section 24 hereof, within 10
days after the date such party becomes a "Lessee" hereunder), each Lessee or
the Guarantor shall deliver to the Lessor a certificate(s) of insurance naming
the Lender, the Lessor, Original AESOP, PVHC, Quartx and the Trustee as
additional insureds as to the item required by Section 31.3. Such insurance
shall not be changed or canceled except as provided below in Section 5.3.
5.3. Changes in Insurance Coverage. No changes shall be made in any of
the foregoing insurance requirements unless the
12
prior written consent of the Lessor, the Lender and the Trustee are first
obtained. The Lessor may grant or withhold its consent to any proposed change
in such insurance in its sole discretion. The Lender and the Trustee shall be
required to grant their consent to any proposed change in such insurance upon
compliance with the following conditions:
(i) The relevant Lessee or the Guarantor shall deliver not
less than 30 days' prior written notice of any proposed change in such
insurance to the Lender and the Trustee;
(ii) The relevant Lessee or the Guarantor shall furnish to
the Lender and the Trustee a letter from each Rating Agency with
respect to all Outstanding Commercial Paper Notes and Notes rated by
such Rating Agency to the effect that such proposed change will not
cause a reduction in or a withdrawal of the current rating of such
Commercial Paper Notes or the Notes; and
(iii) The proposed change will satisfy the Rating Agency
Confirmation Condition.
6. RISK OF LOSS; CASUALTY AND INELIGIBLE VEHICLE OBLIGATIONS.
6.1. Risk of Loss Borne by Lessees. Upon delivery of each Vehicle to
the Lessee of such Vehicle, as between the Lessor and such Lessee, such 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 such
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.
6.2. Casualty; Ineligible Vehicles. If a Vehicle becomes a Standard
Casualty or an Ineligible Vehicle, then the Lessee of such Vehicle will (i)
promptly notify the Lessor thereof and (ii) promptly, but in no event later
than the Payment Date with respect to the Related Month during which such
Vehicle became a Standard Casualty or an Ineligible Vehicle, pay to the Lessor
the Termination Value of such Vehicle (as of the date such Vehicle became a
Standard Casualty or an Ineligible Vehicle). Upon
13
payment by such Lessee to the Lessor of the Termination Value of any Vehicle
that has become a Standard Casualty or an Ineligible Vehicle (i) the Lessor
shall cause title to such Vehicle to be transferred to such Lessee to
facilitate liquidation of such Vehicle by such Lessee, (ii) such Lessee shall
be entitled to any physical damage insurance proceeds applicable to such
Vehicle, and (iii) the Administrator shall request the Trustee to cause its
Lien to be removed from the Certificate of Title for such Vehicle.
7. VEHICLE USE. So long as no AESOP II Operating Lease Event of
Default, Liquidation Event of Default or Limited Liquidation Event of Default
has occurred (subject, however, to Section 2.6 hereof), each Lessee may use
Vehicles leased hereunder in its regular course of business. Such use shall be
confined primarily to the United States; provided, however, that the principal
place of business or rental office of each Lessee with respect to the Vehicles
is located in the United States. The Administrator 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 Lender 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 Vehicles and the
Certificates of Title as against each Lessee or any third party in any
applicable jurisdiction and to establish, perfect and maintain the Trustee's
Lien on the Vehicles and the Certificates of Title (other than noting the Lien
of the Trustee on the Certificates of Title with respect to Vehicles titled in
the states of Ohio, Oklahoma and Nebraska) as a perfected first lien in any
applicable jurisdiction. Each Lessee may, at its sole expense, change the place
of principal location of any Vehicles. Notwithstanding the foregoing, no change
of location shall be undertaken unless and until (x) all actions necessary to
maintain the Lien of the Trustee on such Vehicles and the Certificates of Title
(other than noting the Lien of the Trustee on the Certificates of Title with
respect to Vehicles titled in the states of Ohio, Oklahoma and Nebraska) with
respect to such Vehicles shall have been taken and (y) all legal requirements
applicable to such Vehicles shall have been met or obtained. Following the
occurrence of an AESOP II Operating Lease Event of Default, a Limited
Liquidation Event of Default, a Liquidation Event of Default or a Manufacturer
Event of Default, and upon the Lender's request, each Lessee shall advise the
Lender in writing where all Vehicles leased hereunder as of such date are
principally located. Each Lessee shall not knowingly use any Vehicles or
knowingly permit the same to be used for any unlawful purpose. Each Lessee
shall use reasonable precautions
14
to prevent loss or damage to Vehicles. Each Lessee shall comply with all
applicable statutes, decrees, ordinances and regulations regarding acquiring,
titling, registering, leasing, insuring and disposing of Vehicles and shall
take reasonable steps to ensure that operators are licensed. Each Lessee and
the Lessor agree that such Lessee shall perform, at such Lessee's own expense,
such Vehicle preparation and conditioning services with respect to Vehicles
leased by such Lessee hereunder as are customary. The Lessor or the Trustee or
any authorized representative of the Lessor or the Trustee may during
reasonable business hours from time to time, without disruption of each
Lessee's business, subject to applicable law, inspect Vehicles and registration
certificates, Certificates of Title and related documents covering Vehicles
wherever the same be located. No Lessee shall sublease any Vehicles, nor shall
any Lessee assign any right or interest herein or in any Vehicles; provided,
however, the foregoing shall not be deemed to prohibit the Lessees from renting
Vehicles to third party customers in the ordinary course of their respective
car rental businesses.
8. LIENS. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it hereunder free of all Liens arising during the Term. Upon
the Vehicle Operating Lease Expiration Date for each Vehicle leased hereunder
should any such Lien exist the Lessor may, in its discretion, remove such Lien
and any sum of money that may be paid by the Lessor in release or discharge
thereof, including attorneys' fees and costs, will be paid by the Lessee of
such Vehicle upon demand by the Lessor. The Lessor may grant security interests
in the Vehicles leased by a Lessee hereunder without consent of such Lessee;
provided, however, that if any such Liens would interfere with the rights of
such Lessee under this Agreement, the Lessor must obtain the prior written
consent of such Lessee. Each Lessee agrees and acknowledges that the granting
of Liens and the taking of other actions pursuant to the Loan Agreements, the
Indenture and the other Related Documents does not interfere with the rights of
such Lessee under this Agreement.
9. NON-DISTURBANCE. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Vehicles leased by
such Lessee hereunder will not be disturbed during the Term subject, however,
to Sections 2.6 and 18 hereof and except that the Lessor and the Trustee each
retains the right, but not the duty, to inspect such Vehicles without
disturbing the ordinary conduct of such Lessee's business. Upon the request of
the Lessor, the Lender or the Trustee from time to time, each Lessee will make
reasonable efforts to confirm to the
15
Lessor, the Lender and the Trustee the location, mileage and condition of each
Vehicle leased by such Lessee hereunder and to make available for the Lessor's,
the Lender's or the Trustee's inspection within a reasonable time period, not
to exceed 45 days, such Vehicles at the location where such Vehicles are
normally domiciled. Further, each Lessee will, during normal business hours and
with a notice of 3 Business Days, make its records pertaining to the Vehicles
leased by such Lessee hereunder available to the Lessor, the Lender or the
Trustee for inspection at the location where such Lessee's records are normally
domiciled.
10. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES.
Each Lessee, at its expense, shall be responsible for proper registration and
licensing of Vehicles leased by such Lessee hereunder, and titling of such
Vehicles in the name of the Lessor or its Permitted Nominee (with the Lien of
the Trustee noted thereon (except with respect to the Vehicles titled in the
States of Oklahoma, Nebraska and Ohio)), and, where required, shall have such
Vehicles inspected by any appropriate governmental authority; provided,
however, that notwithstanding the foregoing, possession of all Certificates of
Title shall at all times remain with the Administrator, who will hold such
Certificates of Title in its capacity as agent for the Lessor and on behalf of
the Lender and the Trustee. Each Lessee shall be responsible for the payment of
all registration fees, title fees, license fees, traffic summonses, penalties,
judgments and fines incurred with respect to any Vehicle leased by such Lessee
hereunder 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 such Vehicles in connection with such Lessee's
operation of such Vehicles. The Lessor agrees to execute a power of attorney in
substantially the form of Attachment C hereto (each, a "Power of Attorney"),
and such other documents as may be necessary in order to allow the Lessees to
title, register and dispose of the Vehicles leased hereunder in accordance with
the terms hereof; provided, however, that possession of all Certificates of
Title shall at all times remain with the Administrator who will hold such
Certificates of Title in its capacity as agent for the Lessor and on behalf of
the Lender and the Trustee, and each Lessee acknowledges and agrees that 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 18.3(iii) hereof.
16
11. MAINTENANCE AND REPAIRS. Each Lessee shall pay for all maintenance
and repairs to keep Vehicles leased by such Lessee hereunder in good working
order and condition, and such Lessee will maintain such Vehicles as required in
order to keep the Manufacturer's warranty in force. Each Lessee will return
Vehicles leased by such Lessee hereunder to an authorized Manufacturer facility
or such Lessee's Manufacturer authorized warranty station for warranty work.
Each Lessee will comply with any Manufacturer's recall of any Vehicle leased by
such Lessee hereunder. Each Lessee will pay, or cause to be paid, all usual and
routine expenses incurred in the use and operation of Vehicles leased by such
Lessee hereunder including, but not limited to, fuel, lubricants, and coolants.
Each Lessee shall not make any material alterations to any Vehicles leased by
such Lessee hereunder without the prior consent of the Lessor. Any improvements
or additions to any Vehicles shall become and remain the property of the
Lessor, except that any addition to Vehicles leased hereunder made by the
Lessee of such Vehicles shall remain the property of such Lessee if such
addition can be disconnected from such Vehicles without impairing the
functioning of such Vehicles or its resale value, excluding such addition.
12. VEHICLE WARRANTIES.
12.1. No Lessor Warranties. EACH LESSEE ACKNOWLEDGES THAT THE LESSOR
IS NOT THE MANUFACTURER, THE AGENT OF THE MANUFACTURER, OR THE DISTRIBUTOR OF
THE VEHICLES LEASED BY SUCH LESSEE HEREUNDER. THE LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE FITNESS, SAFENESS, DESIGN,
MERCHANTABILITY, CONDITION, QUALITY, CAPACITY OR WORKMANSHIP OF THE VEHICLES
NOR ANY WARRANTY THAT THE VEHICLES WILL SATISFY THE REQUIREMENTS OF ANY LAW OR
ANY CONTRACT SPECIFICATION, AND AS BETWEEN THE LESSOR AND EACH LESSEE, EACH
LESSEE AGREES TO BEAR ALL SUCH RISKS AT ITS SOLE COST AND EXPENSE. EACH LESSEE
SPECIFICALLY WAIVES ALL RIGHTS TO MAKE CLAIMS AGAINST THE LESSOR AND ANY
VEHICLE FOR BREACH OF ANY WARRANTY OF ANY KIND WHATSOEVER AND, AS TO THE
LESSOR, EACH LESSEE LEASES THE VEHICLES "AS IS." IN NO EVENT SHALL THE LESSOR
BE LIABLE FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHATSOEVER OR
HOWSOEVER CAUSED.
12.2. Manufacturer's Warranties. If a Vehicle leased hereunder is
covered by a Manufacturer's warranty, the Lessee of such Vehicle, during the
Vehicle Term for such Vehicle, shall have the right to make any claims under
such warranty which the Lessor could make.
17
13. VEHICLE USAGE GUIDELINES AND RETURN; SPECIAL DEFAULT PAYMENTS;
EARLY TERMINATION PAYMENTS.
13.1. Usage. As used herein "Vehicle Turn-In Condition" will be
determined in accordance with the related Manufacturer Program.
13.2. Return. (a) Each Lessee will, subject to Sections 2.5 and 2.6,
return each Vehicle leased by such Lessee hereunder (other than a Standard
Casualty or a Vehicle which has become an Ineligible Vehicle) to the nearest
related Manufacturer official auction or other facility designated by such
Manufacturer at such Lessee's sole expense or to such other location designated
by the Lessor (with any additional cost of delivery in excess of what would
have been incurred upon delivery to the related Manufacturer at the expense of
the Lessor), in each case in accordance with the requirements of Section 3.1(b)
hereof.
(b) Each Lessee agrees that the Vehicles leased by such Lessee
hereunder will be in Vehicle Turn-In Condition upon return to or upon the order
of the Lessor. Any rebate or credits applicable to the unexpired term of any
license plates for a Vehicle leased by a Lessee hereunder shall inure to the
benefit of such Lessee.
13.3. Special Default Payments. (a) Each Lessee will use its best
efforts to maintain the Vehicles leased by such Lessee hereunder such that no
Excess Damage Charges or Excess Mileage Charges will be deductible from the
Repurchase Price due from a Manufacturer or payable by the Lessor upon the turn
back of such Vehicles under the applicable Manufacturer Program. Upon receipt
of payment of the Repurchase Price of each Vehicle leased by a Lessee hereunder
from the Manufacturer (or the receipt of payment of the Repurchase Price of
each such Vehicle sold through an auction conducted by or through a
Manufacturer) or upon the date by which the Repurchase Price of each such
Vehicle turned-back to a Manufacturer would have been paid if not for a
Manufacturer Event of Default, the Lessor will charge such Lessee for any
Excess Damage Charges and/or Excess Mileage Charges applicable to such Vehicle
pursuant to the applicable Manufacturer Program (any such charges are referred
to as "Special Default Payments").
(b) On each Payment Date, each Lessee shall pay to the Lessor all
Special Default Payments that have accrued during the Related Month. The
obligation of such Lessee to pay Special Default Payments shall constitute the
sole remedy respecting the breach of its covenant contained in the first
sentence of Section
18
13.3(a). The provisions of this Section 13.3 will survive the expiration or
earlier termination of the Term.
13.4. Early Termination Payments. If a Lessee turns back any Vehicle
leased by such Lessee hereunder to a Manufacturer under its Manufacturer
Program, upon the receipt of the Repurchase Price of such Vehicle from such
Manufacturer or upon the date by which the Repurchase Price would have been
paid if not for a Manufacturer Event of Default, the Lessor will charge such
Lessee an amount equal to (i) the excess, if any, of (x) the Termination Value
of such Vehicle (as of the Turnback Date) over (y) the sum of the Repurchase
Price received with respect to such Vehicle or that would have been received
but for a Manufacturer Event of Default, as applicable, and any Special Default
Payments made by such Lessee in respect of such Vehicle pursuant to Section
13.3, plus (ii) any unpaid Monthly Base Rent for the Minimum Term plus any
early turn back charges payable or deductible from the Repurchase Price for
Vehicles returned before the Minimum Term in accordance with Section 3.1(b)
hereof (any such amount is referred to as an "Early Termination Payment"). On
each Payment Date, each Lessee shall pay to the Lessor all Early Termination
Payments that have accrued during the Related Month. The provisions of this
Section 13.4 will survive the expiration or earlier termination of the Term.
14. DISPOSITION PROCEDURE. Each Lessee will comply with the
requirements of law and the requirements of the Manufacturer Programs in
connection with, among other things, the delivery of Certificates of Title and
documents of transfer signed as necessary, signed Condition Reports, and signed
odometer statements to be submitted with the Vehicles and accepted by the
Manufacturer or its agent at the time of Vehicle return.
15. ODOMETER DISCLOSURE REQUIREMENT. Each Lessee agrees to comply with
all requirements of law and all Manufacturer Program requirements in connection
with the transfer of ownership by the Lessor of any Vehicle leased by such
Lessee hereunder, including, without limitation, the submission of any required
odometer disclosure statement at the time of any such transfer of ownership.
16. GENERAL INDEMNITY.
16.1. Indemnity by the Lessees and the Guarantor. The Lessees and the
Guarantor agree jointly and severally to indemnify and hold harmless the
Lessor, the Lender and the Trustee and the Lessor's, the Lender's and the
Trustee's directors, officers,
19
stockholders, agents and employees (collectively, the "Indemnified Persons"),
on a net after-tax basis against any and all claims, demands and liabilities of
whatsoever nature and all costs and expenses relating to or in any way arising
out of:
16.1.1. the ordering, delivery, acquisition, title on
acquisition, rejection, installation, possession, titling, retitling,
registration, re-registration, custody by the Lessees or the Guarantor
of title and registration documents, use, non-use, misuse, operation,
deficiency, defect, transportation, repair, control or disposition of
any Vehicle leased hereunder or to be leased hereunder pursuant to a
request by a Lessee. The foregoing shall include, without limitation,
any liability (or any alleged liability) of the Lessor to any third
party arising out of any of the foregoing, including, without
limitation, all legal fees, costs and disbursements arising out of
such liability (or alleged liability);
16.1.2. all (i) federal, state, county, municipal or foreign
license, qualification, registration, franchise, sales, use, gross
receipts, ad valorem, business, property (real or personal), excise,
motor vehicle, and occupation fees and taxes, and all federal, state
and local income taxes, and penalties and interest thereon, and all
other taxes, fees and assessments of any kind whatsoever whether
assessed, levied against or payable by the Lessor or otherwise, with
respect to any Vehicle leased hereunder or the acquisition, purchase,
sale, rental, delivery, use, operation, control, ownership or
disposition of any such Vehicle or measured in any way by the value
thereof or by the ownership by the Lessor with respect thereto and
(ii) documentary, stamp, filing, recording, mortgage or other taxes,
if any, which may be payable by the Lessor in connection with this
Agreement or any other Related Documents; provided, however, that the
following taxes are excluded from the indemnity provided in clauses
(i) and (ii) above:
(i) any tax on, based on, with respect to, or
measured by the net income (including federal alternative
minimum tax) other than any taxes or other charges which may
be imposed as a result of any determination by a taxing
authority that the Lessor is not the owner for tax purposes
of the Vehicles leased hereunder or that this Agreement is
not a "true lease" for tax purposes or that depreciation
deductions that would be available to the owner of such
Vehicles are disallowed,
20
or that the Lessor is not entitled to include the full
purchase price for any such Vehicle in basis including any
amounts payable in respect of interest charges, additions to
tax and penalties that may be imposed, and all attorneys and
accountants fees and expenses and all other fees and expenses
that may be incurred in defending against or contesting any
such determination;
(ii) any withholding tax imposed by the United
States federal government other than such a tax imposed as a
result of a change in law enacted (including new
interpretations thereof), adopted or promulgated after the
Initial Closing Date or, if later, the date the Trustee or
the Lender acquires its interest in the Vehicles leased
hereunder or the Loan Agreements, the Indenture, the
Assignment Agreements, or any other related operative
documents that causes it to be an Indemnified Person
hereunder unless such a tax is enacted, adopted or
promulgated as a tax in lieu of, or in substitution for a tax
not otherwise indemnifiable hereunder;
(iii) any tax with respect to any Vehicle leased by
a Lessee hereunder or any transaction relating to such
Vehicle to the extent it covers any period beginning after
the earlier of (A) the discharge in full of such Lessee's
obligation to pay Monthly Base Rent, Supplemental Rent and
any other amount payable hereunder with respect to such
Vehicle or (B) the expiration or other termination of this
Agreement with respect to such Vehicle, unless such tax
accrues in respect of any period during which such Lessee
holds over such Vehicle; and
(iv) any tax that is imposed on an Indemnified
Person or any of its Affiliates, to the extent that such tax
results from the willful misconduct or gross negligence of
such Indemnified Person or such Affiliates;
16.1.3. any violation by any Lessee or the Guarantor of this
Agreement or of any Related Documents to which such Lessee or the
Guarantor 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 objecting of
any governmental or public body or authority and all other
requirements
21
having the force of law applicable at any time to any Vehicle leased
hereunder or any action or transaction by any Lessee or the Guarantor
with respect thereto or pursuant to this Agreement;
16.1.4. all out of pocket costs of the Lessor (including
the fees and out of pocket expenses of counsel for the Lessor) in
connection with the execution, delivery and performance of this
Agreement and the other Related Documents;
16.1.5. all out of pocket costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred by the Lessor,
the Lender or the Trustee in connection with the administration,
enforcement, waiver or amendment of this Agreement and any other
Related Documents and all indemnification obligations of the Lender or
the Lessor under the Related Documents (including all obligations of
Lessor under Section 13.4 and Section 13.5 of the AESOP II Loan
Agreement); and
16.1.6. all costs, fees, expenses, damages and liabilities
(including, without limitation, the fees and out of pocket expenses of
counsel) in connection with, or arising out of, any claim made by any
third party against the Lessor for any reason (including, without
limitation in connection with any audit or investigation conducted by
a Manufacturer under its Manufacturer Program).
If the Lessor shall actually receive any tax benefit (whether by way
of offset, credit, deduction, refund or otherwise) not already taken
into account in calculating the net after-tax basis for such payment
as a result of the payment of any tax indemnified pursuant to this
Section 16 or in connection with the circumstances giving rise to the
imposition of such tax, such tax benefit shall be used to offset any
indemnity payment owed pursuant to this Section 16 or shall be paid to
the relevant Lessee (but only to the extent of any prior indemnity
payments actually made pursuant to this Section 16 and only after the
Lessor shall actually receive such tax benefits), provided, however,
that no such payment to such Lessee shall be made while an AESOP II
Operating Lease Event of Default shall have occurred and be
continuing.
16.2. Reimbursement Obligation by the Lessees and the Guarantor. Each
of the Lessees and the Guarantor shall forthwith
22
upon demand reimburse the Lessor or the relevant Indemnified Person for any sum
or sums expended with respect to any of the foregoing; provided, however, that
to the extent such amounts constitute Excluded Payments, such amounts shall be
paid only to the AESOP I Segregated Account; and provided further that, if so
requested by the relevant Lessee or the Guarantor, the Lessor shall submit to
such Lessee or the Guarantor, as applicable, a statement documenting any such
demand for reimbursement or prepayment. To the extent that any Lessee or the
Guarantor in fact indemnifies the Lessor under the indemnity provisions of this
Agreement, such Lessee or the Guarantor, as applicable, shall be subrogated to
the Lessor's rights in the affected transaction and shall have a right to
determine the settlement of claims therein. The foregoing indemnity as
contained in this Section 16 shall survive the expiration or earlier
termination of this Agreement or any lease of any Vehicle hereunder.
16.3. Defense of Claims. The Lessor agrees to notify any Lessee of any
claim made against it for which such Lessee may be liable pursuant to this
Section 16 and, if such Lessee requests, to contest or allow such Lessee to
contest such claim. If any AESOP II Operating Lease Event of Default shall have
occurred and be continuing, no contest shall be required, and any contest which
has begun shall not be required to be continued to be pursued, unless
arrangements to secure the payment of such Lessee's obligations pursuant to
this Section 16 hereunder have been made and such arrangements are reasonably
satisfactory to the Lessor. The Lessor shall not settle any such claim without
such Lessee's consent, which consent shall not be unreasonably withheld.
Defense of any claim referred to in this Section 16 for which indemnity may be
required shall, at the option and request of the Indemnified Person, be
conducted by the relevant Lessee or the Guarantor, as applicable. Such Lessee
or the Guarantor, as the case may be, will inform the Indemnified Person of any
such claim and of the defense thereof and will provide copies of material
documents relating to any such claim or defense to such Indemnified Person upon
request. Such Indemnified Person may participate in any such defense at its own
expense provided such participation does not interfere with such Lessee's or
the Guarantor's assertion of such claim or defense. Each Lessee and the
Guarantor agrees that no Indemnified Person will be liable to such Lessee or
the Guarantor, as applicable, for any claim caused directly or indirectly by
the inadequacy of any Vehicle leased by such Lessee 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 repairs, servicing or adjustments
23
or any interruption or loss of service or use thereof or any loss of business,
all of which shall be the risk and responsibility of such Lessee or the
Guarantor. The rights and indemnities of each Indemnified Person hereunder are
expressly made for the benefit of, and will be enforceable by, each Indemnified
Person notwithstanding the fact that such Indemnified Person is either no
longer a party to (or entitled to receive the benefits of) this Agreement, or
was not a party to (or entitled to receive the benefits of) this Agreement at
its outset. Except as otherwise set forth herein, nothing herein shall be
deemed to require any Lessee or the Guarantor to indemnify the Lessor for any
of the Lessor's acts or omissions which constitute gross negligence or willful
misconduct. This general indemnity shall not affect any claims of the type
discussed above which any Lessee or the Guarantor may have against the
Manufacturer.
17. ASSIGNMENT.
17.1. Right of the Lessor to Assign this Agreement. The Lessor shall
have the right to finance the acquisition and ownership of Vehicles by selling
or assigning its right, title and interest in this Agreement, including,
without limitation, in moneys due from each Lessee and any third party under
this Agreement; provided, however, that any such sale or assignment shall be
subject to the rights and interest of each Lessee in the Vehicles leased by
such Lessee hereunder, including but not limited to such Lessee's right of
quiet and peaceful possession of such Vehicles as set forth in Section 9
hereof, and under this Agreement.
17.2. Limitations on the Right of the Lessees to Assign this
Agreement. Each Lessee shall not, without prior written consent of the Lessor,
AFC-II and the Trustee and without having satisfied the Rating Agency Consent
Condition and the CP Rating Agency Condition, assign this Agreement or any of
its rights hereunder to any other party; provided, however, that each Lessee
may rent the Vehicles leased by such Lessee hereunder under the terms of its
normal daily rental programs. Any purported assignment in violation of this
Section 17.2 shall be void and of no force or effect. Nothing contained herein
shall be deemed to restrict the right of any Lessee to acquire or dispose of,
by purchase, lease, financing, or otherwise, motor vehicles that are not
subject to the provisions of this Agreement.
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18. DEFAULT AND REMEDIES THEREFOR.
18.1. Events of Default. Any one or more of the following will
constitute an event of default (an "AESOP II Operating Lease Event of Default")
as that term is used herein:
18.1.1. there occurs (i) a default in the payment of the portion of
Monthly Base Rent that relates to the Loan Principal Amount, the Special
Default Payments, the Early Termination Payments, Vehicle Purchase Price or
Termination Value upon a Standard Casualty or when a Vehicle becomes an
Ineligible Vehicle or upon a Vehicle Return Default or any Supplemental Rent
(to the extent not included in any of the foregoing) and the continuance
thereof for a period of five Business Days or (ii) a default and continuance
thereof for five Business Days after notice thereof by the Lessor or the
Trustee to the relevant Lessee or the Guarantor in the payment of any amount
payable under this Agreement (other than amounts described in clause (i)
above);
18.1.2. any unauthorized assignment or transfer of this Agreement by
any Lessee or the Guarantor occurs;
18.1.3. the failure, in any material respect, of any Lessee and the
Guarantor to maintain, or cause to be maintained, insurance as required in
Section 5 or Section 31.3;
18.1.4. the failure of any Lessee and the Guarantor to observe or
perform any other covenant, condition, agreement or provision hereof,
including, but not limited to, usage and maintenance, and such default
continues for more than thirty (30) days after the date written notice thereof
is delivered by the Lessor or the Trustee to such Lessee;
18.1.5. if any representation or warranty made by any Lessee or the
Guarantor herein is inaccurate or incorrect or is breached or is false or
misleading in any material respect as of the date of the making thereof or any
schedule, certificate, financial statement, report, notice, or other writing
furnished by or on behalf of such Lessee or the Guarantor to the Lessor or the
Trustee is false or misleading in any material respect on the date as of which
the facts therein set forth are stated or certified, and the circumstance or
condition in respect of which such representation, warranty or writing was
inaccurate, incorrect, breached, false or misleading in any material respect,
as the case may be, shall not have been eliminated or otherwise cured for
thirty (30) days after the earlier of (x) the date of the receipt of written
notice thereof from the Lessor, the Lender
25
or the Trustee to the Guarantor or such Lessee and (y) the date the Guarantor
or such Lessee learns of such circumstance or condition;
18.1.6. an Event of Bankruptcy occurs with respect to any Lessee or
the Guarantor;
18.1.7. a Loan Event of Default occurs;
18.1.8. a Finance Lease Event of Default or an AESOP I Operating Lease
Event of Default occurs; or
18.1.9. the Pension Benefit Guaranty Corporation or the Internal
Revenue Service shall have filed notice of one or more liens against a Lessee
(unless such lien does not purport to cover the Collateral or any amount
payable under the Leases), and, in the case of notice filed by the Internal
Revenue Service, such notice shall have remained in effect for more than thirty
(30) days unless, prior to the expiration of such period, such Lessee shall
have provided the Lessor with a bond in an amount at least equal to the amount
of such lien or, in the case of any such lien in an amount less than
$1,000,000, such Lessee shall have established to the reasonable satisfaction
of the Lessor that such lien is being contested in good faith and that adequate
reserves have been established in respect of the claim giving rise to such
lien.
18.2. Effect of AESOP II Operating Lease Event of Default or
Liquidation Event of Default. If any AESOP II Operating Lease Event of Default
described in Section 18 or any Liquidation Event of Default shall occur, (i)
the rights of the Lessees to place Vehicle Orders pursuant to Section 2.1 and
to lease additional Vehicles from the Lessor shall immediately terminate, and
(ii) if AFC-II has declared the Loan Note under any Loan Agreement to be due
and payable pursuant to Section 12.2 of such Loan Agreement, (x) any accrued
and unpaid Monthly Base Rent, Supplemental Rent and all other payments accrued
but unpaid under this Agreement (calculated as if all Vehicles leased hereunder
had become a Standard Casualty for the Related Month and the full amount of
interest on such Loan Note was then due and payable in full) shall,
automatically, without further action by the Lessor or the Trustee, become
immediately due and payable and (y) each Lessee shall, at the request of the
Lessor, return or cause to be returned all Vehicles leased by such Lessee
subject to this Agreement (and the Administrator shall deliver to the Trustee
the Certificates of Title relating thereto) to the Lessor in accordance with
the provisions of Section 13.2 hereof.
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18.3. Rights of Lessor Upon AESOP II Operating Lease Event of Default,
Limited Liquidation Event of Default or Liquidation Event of Default. If an
AESOP II Operating Lease Event of Default, Limited Liquidation Event of Default
or Liquidation Event of Default shall occur, then the Lessor at its option may:
(i) Proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by the Lessees (or any
Lessee(s) against which the Lessor determines to exercise its remedies
hereunder) or the Guarantor of the applicable covenants and terms of
this Agreement or to recover damages for the breach hereof calculated
in accordance with Section 18.5; or
(ii) By notice in writing to the Lessees (or any Lessee(s)
against which the Lessor determines to exercise its remedies
hereunder), terminate this Agreement in its entirety and/or the right
of possession hereunder of the Lessees (or in respect only of the
applicable Lessee(s)) of the Vehicles leased hereunder, and the Lessor
may direct delivery by the Lessees (or in respect only of the
applicable Lessee(s)) or the Guarantor of documents of title to the
Vehicles leased hereunder, whereupon all rights and interests of the
Lessees (or the applicable Lessee(s)) or the Guarantor to such
Vehicles will cease and terminate (but the Lessees (or the applicable
Lessee(s)) and the Guarantor will remain liable hereunder as herein
provided, provided, however, their liability will be calculated in
accordance with Section 18.5); and thereupon, the Lessor or its agents
may peaceably enter upon the premises of the applicable Lessee(s) or
other premises where such Vehicles may be located and take possession
of them and thenceforth hold, possess and enjoy the same free from any
right of the Lessees (or the applicable Lessee(s)) or the Guarantor,
or their successors or assigns, to use such Vehicles for any purpose
whatsoever, and the Lessor will, nevertheless, have a right to recover
from the Lessees (or the applicable Lessee(s)) or the Guarantor any
and all amounts which under the terms of this Section 18.3 (as limited
by Section 18.5 of this Agreement) as may be then due. The Lessor will
provide the applicable Lessee(s) with written notice of the place and
time of the sale at least five days prior to the proposed sale, which
shall be deemed commercially reasonable, and any Lessee may purchase
such 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
27
law, in equity or in bankruptcy and each and every power and remedy
may be exercised from time to time and simultaneously and as often and
in such order as may be deemed expedient by the Lessor; provided,
however, that the measure of damages recoverable against the Lessees
will in any case be calculated in accordance with Section 18.5. All
such powers and remedies will be cumulative, and the exercise of one
will not be deemed a waiver of the right to exercise any other or
others. No delay or omission of the Lessor in the exercise of any such
power or remedy and no renewal or extension of any payments due
hereunder will impair any such power or remedy or will be construed to
be a waiver of any default or any acquiescence therein. Any extension
of time for payment hereunder or other indulgence duly granted to the
Lessees (or the applicable Lessee(s)) or the Guarantor will not
otherwise alter or affect the Lessor's rights or the obligations
hereunder of such Lessee(s) and the Guarantor. 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
(iii) By notice in writing to the Lessees (or any Lessee(s)
against which the Lessor determines to exercise its remedies
hereunder), terminate the Power of Attorney.
18.4. Rights of Lender and Trustee Upon Liquidation Event
of Default, Limited Liquidation Event of Default and
Non-Performance of Certain Covenants.
(i) If a Liquidation Event of Default or a Limited
Liquidation Event of Default shall have occurred and be continuing,
the Lender and the Trustee, to the extent provided in the Indenture,
shall have the rights against the Guarantor, the Lessee(s), and the
AESOP II Loan Collateral provided in the Indenture upon a Liquidation
Event of Default or a Limited Liquidation Event of Default, as the
case may be, including the right to take possession of all or a
portion of the Vehicles leased hereunder immediately from the
Lessee(s) of such Vehicles.
(ii) If the Guarantor or any Lessee shall default in the due
performance and observance of any of its obligations under Section
31.3, 31.4, 31.5(iv), 31.10, 32.3 or 32.4 hereof, and such default
shall continue unremedied for a period of 30 days after notice thereof
shall have been given to such Lessee by the Lessor, the Lender or the
Trustee, as
28
assignee of the Lessor's rights hereunder, shall have the ability to
exercise all rights, remedies, powers, privileges and claims of the
Guarantor or any Lessee against the Manufacturers under or in
connection with the Manufacturer Programs with respect to (i) Vehicles
the Lessee thereof has determined to turn back to the Manufacturers
under such Manufacturer Programs and (ii) whether or not the Lessee
thereof shall then have determined to turn back such Vehicles, any
Vehicles for which the applicable Repurchase Period will end within
one week or less.
(iii) Upon a default in the performance (after giving effect
to any grace periods provided herein) by the Guarantor or any Lessee
of its obligations hereunder to keep the Vehicles leased hereunder
free of Liens (other than Permitted Liens) and to maintain the
Trustee's first priority perfected security interest in the AESOP II
Loan Collateral, 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 Guarantor or any Lessee as applicable.
(iv) Upon the occurrence of a Liquidation Event of Default or
a Limited Liquidation Event of Default, each Lessee shall return any
Vehicles leased by such Lessee hereunder to the related Manufacturer
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 Lessee thereof to
dispose of such Vehicles in accordance with its instructions. In
addition, following the occurrence of a Liquidation Event of Default
or a Limited Liquidation Event of Default, the Lessor shall have all
of the rights, remedies, powers, privileges and claims vis-a-vis the
Guarantor or any Lessee, necessary or desirable to allow (a) the
Lender to exercise the rights, remedies, powers, privileges and claims
given to the Lender pursuant to Section 12.3 of the AESOP II Loan
Agreement, and each of the Guarantor and each Lessee acknowledges that
it has hereby granted to the Lessor all of the rights, remedies,
powers, privileges and claims granted by the Lessor to the Lender
pursuant to Article 7 of the AESOP II Loan Agreement and that, under
certain circumstances set forth in the AESOP II
29
Loan Agreement, the Lender may act in lieu of the Lessor in the
exercise of such rights, remedies, powers, privileges and claims and
(b) the Trustee to exercise the rights, remedies, powers, privileges
and claims given to the Trustee pursuant to Sections 3.3 and 9.2 of
the Indenture, and each of the Guarantor and each Lessee acknowledges
that it has hereby granted to the Lessor all of the rights, remedies,
powers, privileges and claims granted by the Lender to the Trustee
pursuant to Article 3 of the Indenture and that, under certain
circumstances set forth in the Indenture, the Trustee may act in lieu
of the Lessor in the exercise of such rights, remedies, powers,
privileges and claims.
18.5. Measure of Damages. If an AESOP II Operating Lease Event of
Default, a Limited Liquidation Event of Default or a Liquidation Event of
Default occurs and the Lessor, the Lender or the Trustee exercises the remedies
granted to the Lessor, the Lender or the Trustee under this Article 18, the
amount that the Lessor shall be permitted to recover shall be equal to:
(i) all Monthly Base Rent, all Supplemental Rent and all
other payments payable under this Agreement (calculated as provided in
Section 18.2); plus
(ii) any damages and expenses, including reasonable
attorneys' fees and expenses (but excluding net after-tax losses of
federal and state income tax benefits to which the Lessor would
otherwise be entitled as a result of this Agreement), which the
Lessor, the Lender or the Trustee will have sustained by reason of the
AESOP II Operating Lease Event of Default, Limited Liquidation Event
of Default or Liquidation Event of Default, together with reasonable
sums for such attorneys' fees and such expenses as will be expended or
incurred in the seizure, storage, rental or sale of the Vehicles
leased hereunder or in the enforcement of any right or privilege
hereunder or in any consultation or action in such connection; plus
(iii) interest on amounts due and unpaid under this Agreement
at the applicable Lender's Carrying Cost Interest Rate plus 1.0% from
time to time computed from the date of the AESOP II Operating Lease
Event of Default, Limited Liquidation Event of Default or Liquidation
Event of Default or the date payments were originally due to the
Lessor under this Agreement or from the date of each expenditure by
the Lessor which is recoverable from the Lessees pursuant to
30
this Section 18, as applicable, to and including the date
payments are made by the Lessees.
18.6. Vehicle Return Default. If any Lessee fails to comply with the
provisions of (a) Section 13.2 hereof with respect to any Vehicle leased by
such Lessee hereunder or (b) Section 3.1 with respect to returning any Vehicles
leased by such Lessee hereunder to the related Manufacturer not later than the
end of the Maximum Term (each, a "Vehicle Return Default"), then the Lessor at
its option may:
(i) proceed by appropriate court action or actions, either at
law or equity, to enforce performance by such Lessee of such covenants
and terms of this Agreement or to recover damages for the breach
hereof calculated in accordance with Section 18.5 as it relates to
such Vehicle; or
(ii) by notice in writing to such Lessee following the
occurrence of such Vehicle Return Default, terminate the Agreement
with respect to such Vehicle and/or the right of possession hereunder
of such Lessee with respect to such Vehicle and the Lessor may direct
delivery by such Lessee or the Guarantor of documents of title to such
Vehicle, whereupon all rights and interests of such Lessee and the
Guarantor to such Vehicle will cease and terminate (but such Lessee
and the Guarantor will remain liable hereunder as herein provided,
provided, however, that their liability will be calculated in
accordance with Section 18.5 as it relates to such Vehicle); and
thereupon the Lessor or its agents may peaceably enter upon the
premises of such Lessee or other premises where such Vehicle may be
located and take possession of it and thenceforth hold, possess and
enjoy the same free from any right of such Lessee or the Guarantor or
their successors or assigns to use such Vehicle for any purpose
whatsoever and the Lessor will nevertheless have a right to recover
from such Lessee or the Guarantor any and all amounts which, under the
terms of this Agreement may then be due. The Lessor will provide such
Lessee with written notice of the place and time of the sale of such
Vehicle at least five days prior to the proposed sale, which sale
shall be deemed commercially reasonable and such Lessee may purchase
the Vehicle at such sale; or
(iii) hold, keep idle or lease to others such Vehicle, as
the Lessor in its sole discretion may determine, free and clear of any
rights of such Lessee without any duty to account to such Lessee with
respect to such action or
31
inaction or for any proceeds with respect to such action or inaction
except that such Lessee's obligation to pay Monthly Base Rent for
periods commencing after such Lessee shall have been deprived of the
use of such Vehicle pursuant to this clause (iii) shall be reduced by
the net proceeds, if any, received by the Lessor from leasing such
Vehicle to any person other than such Lessee for the same period or
any portion thereof; or
(iv) whether or not the Lessor shall have exercised or shall
thereafter exercise any of the rights under the foregoing clauses (i),
(ii) or (iii), demand by written notice to such Lessee that such
Lessee pay to the Lessor immediately, and such Lessee shall so pay to
the Lessor as liquidated damages for loss of a bargain and not as a
penalty, any unpaid Monthly Base Rent due through the Payment Date
with respect to the Related Month during which such Vehicle is
rejected by the Manufacturer or otherwise is not returned to the
Manufacturer or on the date such Lessee is required to, but does not
sell, return or otherwise dispose of such Vehicle pursuant to Section
3.1 or 2.6(b) hereof, any Supplemental Rent then accrued and unpaid
plus whichever of the following amounts the Lessor, in its sole
discretion shall specify in such notice:
(1) an amount equal to the excess, if any, of the
Termination Value for such Vehicle over the Market Value of
such Vehicle as of (a) the date such Vehicle is rejected by a
Manufacturer for not meeting its Manufacturer Program's
Vehicle Turn-In Condition guidelines, or (b) the date such
Lessee is required to, but does not, sell return or otherwise
dispose of such Vehicle pursuant to Section 3.1 or 2.6(b)
hereof; or
(2) an amount equal to the Termination Value for
such Vehicle as of (a) the date such Vehicle is rejected by a
Manufacturer for not meeting its Manufacturer Program's
Vehicle Turn-In Condition guidelines, or (b) the date such
Lessee is required to, but does not, sell, return or
otherwise dispose of such Vehicle pursuant to Section 3.1 or
2.6(b) hereof, in which event (x) the Lessor shall cause
title to such Vehicle to be transferred to such Lessee, (y)
such Lessee shall be entitled to any physical damage
insurance proceeds applicable to such Vehicle, and (z) the
Administrator shall request the Trustee to cause its Lien to
be removed from the Certificate of Title for such Vehicle.
32
(v) If the Lessor shall have sold any Vehicle pursuant to
clause (ii) above, the Lessor in lieu of exercising its rights under
clause (iv) above with respect to such Vehicle may, if it shall so
elect, demand that the relevant Lessee of such Vehicle pay to the
Lessor and such Lessee shall pay to the Lessor on the date of such
sale as liquidated damages for loss of a bargain and not as a penalty,
any unpaid Monthly Base Rent and Supplemental Rent due through such
date of sale plus the amount of any deficiency between the net
proceeds of such sale and the Termination Value of such Vehicle
computed as of the date of the sale.
18.7. Application of Proceeds. The proceeds of any sale or other
disposition pursuant to Section 18.2, 18.3 or 18.6 shall be applied by the
Lessor in its sole discretion as the Lessor deems appropriate.
19. MANUFACTURER EVENTS OF DEFAULT. (a) Upon the occurrence of a
Manufacturer Event of Default with respect to any Manufacturer (a "Defaulting
Manufacturer"), each Lessee, on behalf of the Lessor (i) shall no longer place
Vehicle Orders for additional Vehicles from such Manufacturer and (ii) shall
cancel any Vehicle Order with such Defaulting Manufacturer to which a VIN has
not been assigned as of the date such Manufacturer Event of Default occurs.
(b) Upon the occurrence of a Manufacturer Event of Default, each
Lessee agrees to act at the direction of the Lessor, the Lender or the Trustee
to take commercially reasonable action to liquidate the Vehicles subject to a
Manufacturer Program with respect to which such Manufacturer Event of Default
has occurred.
(c) Upon the occurrence of a Manufacturer Event of Default, except as
provided in Section 13.3, no Lessees shall be liable for any failure by the
Lessor to recover all or any portion of the Repurchase Price with respect to
any Vehicles subject to the Manufacturer Program of the Defaulting
Manufacturer; provided, however, that nothing in this Section 19 shall be
construed to modify, terminate or otherwise affect the Lessees' obligations
under this Agreement.
20. [RESERVED].
21. [RESERVED].
22. CERTIFICATION OF TRADE OR BUSINESS USE. Each Lessee hereby
warrants and certifies, under penalties of perjury, that
33
it intends to use the Vehicles which are subject to this Agreement, in its
trade or business.
23. SURVIVAL. In the event that, during the term of this Agreement,
any Lessee or the Guarantor 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 such Lessee or the
Guarantor.
24. ADDITIONAL LESSEES. Any Eligible Rental Car Company shall have the
right to become a "Lessee" under and pursuant to the terms of this Agreement by
complying with the provisions of this Section 24. In the event an Eligible
Rental Car Company desires to become a "Lessee" under this Agreement, then the
Guarantor and such Eligible Rental Car Company shall execute (if appropriate)
and deliver to the Lessor and the Trustee:
(i) a Joinder in Lease Agreement in the form attached
hereto as Attachment D (each, a "Joinder in Lease");
(ii) the certificate of incorporation for such Eligible
Rental Car Company, duly certified by the Secretary of State of the
jurisdiction of such Eligible Rental Car Company's incorporation,
together with a copy of the by-laws of such Eligible Rental Car
Company, duly certified by a Secretary or Assistant Secretary of such
Eligible Rental Car Company;
(iii) copies of resolutions of the Board of Directors of such
Eligible Rental Car Company authorizing or ratifying the execution,
delivery and performance, respectively, of those documents and matters
required of it with respect to this Agreement, duly certified by the
Secretary or Assistant Secretary of such Eligible Rental Car Company;
(iv) a certificate of the Secretary or Assistant Secretary of
such Eligible Rental Car Company certifying the names of the
individual or individuals authorized to sign the Joinder in Lease and
the other Related Documents to be executed by it, together with
samples of the true signatures of each such individual;
(v) a good standing certificate for such Eligible Rental Car
Company in the jurisdiction of its incorporation and the jurisdiction
of its principal place of business;
34
(vi) a written search report from a Person satisfactory to
the Lessor, the Lender and the Trustee listing all effective financing
statements that name such Eligible Rental Car Company as debtor or
assignor, and that are filed in the jurisdictions in which filings
were made pursuant to clause (vii) below, together with copies of such
financing statements, and tax and judgment lien search reports from a
Person satisfactory to the Lessor, the Lender and the Trustee showing
no evidence of liens filed against such Eligible Rental Car Company
that purport to affect any Vehicles leased hereunder or any Collateral
under the Base Indenture;
(vii) evidence of the filing of proper financing statements
on Form UCC-1 naming such Eligible Rental Car Company, as debtor, and
the Lessor as secured party covering the collateral described in
Section 2(b) hereof;
(viii) evidence of the filing of proper financing statements
on Form UCC-1 naming such Eligible Rental Car Company, as debtor, and
the Trustee as secured party covering the collateral described in
Section 2(b) hereof;
(ix) an Officer's Certificate and an opinion of counsel each
stating that such joinder by such Eligible Rental Car Company complies
with this Section 24 and that all conditions precedent herein provided
for relating to such transaction have been complied with;
(x) an Officer's Certificate from such Eligible Rental Car
Company, as to itself, and from the Guarantor, as to itself and such
Eligible Rental Car Company, stating that the representations and
warranties contained in Section 30 hereof are true and correct;
(xi) an opinion of counsel stating that such Joinder in Lease
and the other Related Documents to which such Eligible Rental Car
Company is a party are legal, valid and binding agreements of such
Eligible Rental Car Company, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and to general principles of equity;
(xii) (1) pro forma unaudited financial statements consisting
of consolidated and consolidating balance sheets and cash
flow statements of the Guarantor and its Consolidated
Subsidiaries as of the end of the
35
fiscal year of the Guarantor immediately preceding the date
such Eligible Rental Car Company proposes to become a
"Lessee" under this Agreement and a statement of income and
retained earnings of the Guarantor and its Consolidated
Subsidiaries for such fiscal year, setting forth in
comparative form the corresponding figures for the
corresponding period of the preceding fiscal year;
(2) a computation of the financial covenants
required to be complied with pursuant to the Working Capital
Facility, in each case for each of the fiscal years referred
to above based on the pro forma financial information
presented above; and
(3) an Officer's Certificate verifying the accuracy
and completeness of such financial statements and
computations signed by an Authorized Officer of the
Guarantor.
Such unaudited financial statements and computations shall reflect the
financial results of such Eligible Rental Car Company as a
consolidated direct or indirect (as applicable) Wholly-Owned
Subsidiary of the Guarantor as if such Eligible Rental Car Company had
been directly or indirectly wholly-owned by the Guarantor as of the
beginning of the earliest fiscal year shown. No Eligible Rental Car
Company shall become a "Lessee" under this Agreement unless the
Guarantor is in compliance on a pro forma basis with the financial
covenants required to be complied with pursuant to the Working Capital
Facility for each of the fiscal years referred to above; and
(xiii) any additional documentation that the Lessor or the
Trustee may require to evidence the assumption by such Eligible Rental Car
Company of the obligations and liabilities set forth in this Agreement.
Upon satisfaction of the foregoing conditions and receipt by such Eligible
Rental Car Company of the applicable Joinder in Lease executed by the Lessor,
such Eligible Rental Car Company shall for all purposes be deemed to be a
"Lessee" for purposes of this Agreement and shall be entitled to the benefits
and subject to the liabilities and obligations of a Lessee hereunder. Each
Eligible Rental Car Company that becomes a Lessee hereunder shall provide
prompt written notice thereof to each Rating Agency.
36
25. TITLE. This is an agreement to lease only and title to Vehicles
will at all times remain in the Lessor's name or in the name of the Lessor's
Permitted Nominee. None of the Lessees nor the Guarantor will have any rights
or interest in Vehicles whatsoever other than the right of possession and use
as provided by this Agreement.
26. GUARANTY.
26.1. Guaranty. In order to induce the Lessor to execute and deliver
this Agreement and to lease Vehicles to the Lessees, and in consideration
thereof, the Guarantor hereby (i) unconditionally and irrevocably guarantees to
the Lessor the obligations of the Lessees to make any payments required to be
made by them under this Agreement, (ii) agrees to cause the Lessees to duly and
punctually perform and observe all of the terms, conditions, covenants,
agreements and indemnities of the Lessees under this Agreement, and (iii)
agrees that, if for any reason whatsoever, any Lessee fails to so perform and
observe such terms, conditions, covenants, agreements and indemnities, the
Guarantor will duly and punctually perform and observe the same (the
obligations referred to in clauses (i) through (iii) above are collectively
referred to as the "Guaranteed Obligations"). The liabilities and obligations
of the Guarantor under the guaranty contained in this Section 26 (this
"Guaranty") will be absolute and unconditional under all circumstances. This
Guaranty shall be a guaranty of payment and performance and not merely of
collection, and the Guarantor hereby agrees that it shall not be required that
the Lessor, the Lender or the Trustee assert or enforce any rights against any
Lessee or any other person before or as a condition to the obligations of the
Guarantor pursuant to this Guaranty.
26.2. Scope of Guarantor's Liability. The Guarantor's obligations
hereunder are independent of the obligations of any Lessee(s), any other
guarantor or any other Person, and the Lessor may enforce any of its rights
hereunder independently of any other right or remedy that the Lessor may at any
time hold with respect to this Agreement or any security or other guaranty
therefor. Without limiting the generality of the foregoing, the Lessor may
bring a separate action against the Guarantor without first proceeding against
any Lessee(s), any other guarantor or any other Person, or any security held by
the Lessor, and regardless of whether any Lessee(s) or any other guarantor or
any other Person is joined in any such action. The Guarantor's liability
hereunder shall at all times remain effective with respect to the full amount
due from any Lessee(s) hereunder, notwithstanding any
37
limitations on the liability of any Lessee(s) to the Lessor contained in any of
the Related Documents or elsewhere. The Lessor's rights hereunder shall not be
exhausted by any action taken by the Lessor until all Guaranteed Obligations
have been fully paid and performed. The liability of the Guarantor hereunder
shall be reinstated and revived, and the rights of the Lessor shall continue,
with respect to any amount at any time paid on account of the Guaranteed
Obligations which shall thereafter be required to be restored or returned by
the Lessor upon the bankruptcy, insolvency or reorganization of any Lessee(s),
any other guarantor or any other Person, or otherwise, all as though such
amount had not been paid.
26.3. Lessor's Right to Amend this Agreement, Etc. The Guarantor
authorizes the Lessor, at any time and from time to time without notice and
without affecting the liability of the Guarantor hereunder, to: (a) alter the
terms of all or any part of the Guaranteed Obligations and any security and
guaranties therefor including without limitation modification of times for
payment and rates of interest; (b) accept new or additional instruments,
documents, agreements, security or guaranties in connection with all or any
part of the Guaranteed Obligations; (c) accept partial payments on the
Guaranteed Obligations; (d) waive, release, reconvey, terminate, abandon,
subordinate, exchange, substitute, transfer, compound, compromise, liquidate
and enforce all or any part of the Guaranteed Obligations and any security or
guaranties therefor, and apply any such security and direct the order or manner
of sale thereof (and bid and purchase at any such sale), as the Lessor in its
discretion may determine; (e) release any Lessee, any other guarantor or any
other Person from any personal liability with respect to all or any part of the
Guaranteed Obligations; and (f) assign its rights under this Guaranty in whole
or in part.
26.4. Waiver of Certain Rights by Guarantor. The Guarantor
hereby waives each of the following to the fullest extent allowed
by law:
(a) all statutes of limitation as a defense to any
action brought by the Lessor against the Guarantor;
(b) any defense based upon:
(i) the unenforceability or invalidity of all or
any part of the Guaranteed Obligations or any security
or other guaranty for the Guaranteed Obligations or the
38
lack of perfection or failure of priority of any secu-
rity for the Guaranteed Obligations; or
(ii) any act or omission of the Lessor or any other
Person that directly or indirectly results in the discharge
or release of any Lessee or any other Person or any of the
Guaranteed Obligations or any security therefor; or
(iii) any disability or any other defense of any
Lessee or any other Person with respect to the Guaranteed
Obligations, whether consensual or arising by operation of
law or any bankruptcy, insolvency or debtor-relief
proceeding, or from any other cause;
(c) any right (whether now or hereafter existing) to
require the Lessor, as a condition to the enforcement of
this Guaranty, to:
(i) accelerate the Guaranteed Obligations; or
(ii) give notice to the Guarantor of the terms,
time and place of any public or private sale of any
security for the Guaranteed Obligations; or
(iii) proceed against any Lessee, any other
guarantor or any other Person, or proceed against or exhaust
any security for the Guaranteed Obligations;
(d) all rights of subrogation, all rights to enforce any remedy that
the Lessor now or hereafter has against any Lessee or any other Person, and any
benefit of, and right to participate in, any security now or hereafter held by
the Lessor with respect to the Guaranteed Obligations;
(e) presentment, demand, protest and notice of any kind, including
without limitation notices of default and notice of acceptance of this
Guaranty;
(f) all suretyship defenses and rights of every nature
otherwise available under New York law and the laws of any other
jurisdiction; and
(g) all other rights and defenses the assertion or exercise of which
would in any way diminish the liability of the Guarantor hereunder.
39
26.5. [RESERVED].
26.6. Guarantor to Pay Lessor's Expenses. The Guarantor agrees to pay
to the Lessor, on demand, all costs and expenses including attorneys' and other
professional and paraprofessional fees, incurred by the Lessor in exercising
any right, power or remedy conferred by this Guaranty, or in the enforcement of
this Guaranty, whether or not any action is filed in connection therewith.
Until paid to the Lessor, such amounts shall bear interest, commencing with the
Lessor's demand therefor, at the Prime Rate plus 1.0%.
26.7. Reinstatement. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time payment of any of the amounts
payable by any Lessee under this Agreement is rescinded or must otherwise be
restored or returned by the Lessor, upon an event of bankruptcy, dissolution,
liquidation or reorganization of any Lessee or the Guarantor or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, any Lessee or the Guarantor or any substantial
part of their respective property, or otherwise, all as though such payment had
not been made.
26.8. Pari Passu Indebtedness. The Guarantor (i) represents and
warrants that, as of the date hereof, the obligations of the Guarantor under
this Guaranty will rank pari passu with any existing unsecured indebtedness of
the Guarantor and (ii) covenants and agrees that from and after the date hereof
the obligations of the Guarantor under this Guaranty will rank pari passu with
any unsecured indebtedness of the Guarantor incurred after the date hereof.
27. RIGHTS OF LESSOR ASSIGNED TO TRUSTEE. Notwithstanding anything to
the contrary contained in this Agreement, each of the Lessees and the Guarantor
acknowledges that the Lessor has assigned all of its rights under this
Agreement (other than its right to receive Excluded Payments) to AFC-II
pursuant to the AESOP II Loan Agreement and AFC-II has assigned such rights to
the Trustee pursuant to the Indenture. Accordingly, each of the Lessees and the
Guarantor agrees that:
(i) Subject to the terms of the AESOP II Loan Agreement and
the Indenture, the Trustee shall have all the rights, powers,
privileges and remedies of the Lessor hereunder (other than the right
to receive Excluded Payments, which shall be paid to the AESOP II
Segregated Account) and the Guarantor's and each Lessee's obligations
hereunder
40
(including the payment of Monthly Base Rent, Supplemental Rent and all
other amounts payable hereunder) shall not be subject to any claim or
defense which the Guarantor or such Lessee may have against the Lessor
or any Lessee (other than the defense of payment actually made) and
shall be absolute and unconditional and shall not be subject to any
abatement, setoff, counterclaim, deduction or reduction for any reason
whatsoever. Specifically, each of the Lessees and the Guarantor agrees
that, upon the occurrence of an AESOP II Operating Lease Event of
Default, a Limited Liquidation Event of Default or a Liquidation Event
of Default, the Trustee may exercise (for and on behalf of the Lessor)
any right or remedy against any Lessee or the Guarantor provided for
herein (other than with respect to the right to receive Excluded
Payments) and none of the Lessees nor the Guarantor will interpose as
a defense that such claim should have been asserted by the Lessor;
(ii) Upon the delivery by the Trustee of any notice to any
Lessee or the Guarantor stating that an AESOP II Operating Lease Event
of Default, a Limited Liquidation Event of Default or a Liquidation
Event of Default has occurred, the relevant Lessee or the Guarantor,
as the case may be, will, if so requested by the Trustee, treat the
Trustee or the Trustee's designee for all purposes (other than with
respect to the right to receive Excluded Payments) as the Lessor
hereunder and in all respects comply with all obligations under this
Agreement that are asserted by the Trustee as the successor to the
Lessor hereunder, irrespective of whether such Lessee or the Guarantor
has received any such notice from the Lessor; provided, however, the
Trustee, shall in no event be liable to any Lessee for any action
taken by it in its capacity as successor to the Lessor other than
actions that constitute negligence or willful misconduct;
(iii) Each of the Lessees and the Guarantor acknowledges that
pursuant to the AESOP II Loan Agreement and the Indenture the Lessor
has irrevocably authorized and directed each Lessee or the Guarantor
to, and each Lessee and the Guarantor shall, make payments of Monthly
Base Rent and Supplemental Rent hereunder (and any other payments
hereunder) (other than Excluded Payments, which shall be paid to the
AESOP II Segregated Account) 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 such Lessee
41
and the Guarantor to the Lessor hereunder to the extent of such
payments. Upon written notice to the Lessees or the Guarantor of a
sale or assignment by the Trustee of its right, title and interest in
moneys due under this Agreement to a successor Trustee, each Lessee or
the Guarantor, as the case may be, shall thereafter make payments of
all Monthly Base Rent and Supplemental Rent (and any other payments
hereunder) (other than Excluded Payments, which shall be paid to the
AESOP II Segregated Account) to the party specified in such notice;
(iv) Upon request made by the Trustee at any time, each of
the Lessees and the Guarantor will take such actions as are requested
by the Trustee to assist the Trustee in maintaining the Trustee's
first priority perfected security interest in the Vehicles leased
hereunder, the Certificates of Title with respect thereto and any
other portion of the AESOP II Loan Collateral; and
(v) In the event that the Indenture terminates and all
obligations owing under the Indenture have been paid in full, the
Lender shall have all rights under this Agreement previously assigned
to the Trustee.
28. [RESERVED].
29. MODIFICATION AND SEVERABILITY. The terms of this Agreement will
not be waived, altered, modified, amended, supplemented or terminated in any
manner whatsoever unless (i) the same shall be in writing and signed and
delivered by the Lessor, the Guarantor and each Lessee and consented to in
writing by (x) the Lender and the Trustee and (y) if such waiver, alteration,
modification, amendment, supplement or termination would materially adversely
affect the rights of the holders of the outstanding Preferred Stock, the
holders of the outstanding Preferred Stock, (ii) the Lessor shall have received
in writing confirmation from each of the Rating Agencies that its then current
rating of the Notes and the Commercial Paper Notes will not be reduced or
withdrawn as a result thereof and (iii) the Rating Agency Consent Condition
shall have been satisfied. If any part of this Agreement is not valid or
enforceable according to law, all other parts will remain enforceable. The
Lessor shall provide prompt written notice to each Rating Agency of any such
waiver, modification or amendment.
30. CERTAIN REPRESENTATIONS AND WARRANTIES. Each Lessee
42
represents and warrants to the Lessor and the Trustee as to itself, and the
Guarantor represents and warrants to the Lessor and the Trustee as to itself
and as to each Lessee, that as of the Initial Closing Date and as of each
Series Closing Date:
30.1. Organization; Ownership; Power; Qualification. The Guarantor and
each Lessee is (i) 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.
30.2. Authorization; Enforceability. The Guarantor and each Lessee has
the corporate power and has taken all necessary corporate action to authorize
it to execute, deliver and perform this Agreement and each of the other Related
Documents to which it is a party in accordance with their respective terms, and
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by the Guarantor and each Lessee and is,
and each of the other Related Documents to which the Guarantor or such Lessee
is a party is, a legal, valid and binding obligation of the Guarantor and such
Lessee, enforceable in accordance with its terms.
30.3. Compliance. The execution, delivery and performance, in
accordance with their respective terms, by the Guarantor and each Lessee of
this Agreement and each of the other Related Documents to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, do
not and will not (i) require any consent, approval, authorization or
registration not already obtained or effected, (ii) violate any applicable law
with respect to the Guarantor or such Lessee which violation could result in a
Material Adverse Effect, (iii) conflict with, result in a breach of, or
constitute a default under the certificate or articles of incorporation or
by-laws, as amended, of the Guarantor or such Lessee, (iv) conflict with,
result in a breach of, or constitute a default under any indenture, agreement,
or other instrument to which the Guarantor or such Lessee is a party or by
which its properties may be bound which conflict, breach or default could
result in a Material Adverse Effect, or (v) result in or require the creation
or imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Lessee except Permitted Encumbrances.
43
30.4. Financial Information; Financial Condition. All balance sheets,
all statements of operations, of shareholders' equity and of cash flow, and
other financial data (other than projections) which have been or shall
hereafter be furnished to the Lessor, the Lender or the Trustee for the
purposes of or in connection with this Agreement or the Related Documents have
been and will be prepared in accordance with GAAP and do and will present
fairly the financial condition of the entities involved as of the dates thereof
and the results of their operations for the periods covered thereby. Such
financial data include the following financial statements and reports which
have been furnished to the Lessor and the Trustee on or prior to such Closing
Date:
(i) the audited consolidated financial statements consisting
of a statement of financial condition of the Guarantor and its
Consolidated Subsidiaries as of December 31, 1996 and as to the
Predecessor Companies as of December 31, 1995, and the related
statements of operations, stockholder's equity and cash flows of the
Guarantor and its Consolidated Subsidiaries for the period October 17,
1996 (Date of Acquisition) to December 31, 1996 and, as to the
Predecessor Companies, the related statements of operations,
stockholder's equity and cash flows for each of the two years in the
period ended December 31, 1995 and the period January 1, 1996 to
October 16, 1996;
(ii) the unaudited condensed consolidated financial
statements consisting of a statement of financial position of the
Guarantor and its Consolidated Subsidiaries as of March 31, 1997, and
the related statements of operations, stockholder's equity and cash
flows of the Guarantor and its Consolidated Subsidiaries for the three
months ended March 31, 1997 and, as to the Predecessor Companies, the
related statements of operations, stockholder's equity and cash flows
for the three months ended March 31, 1996; and
(iii) the unaudited pro forma consolidated financial
statements consisting of a statement of financial position of the
Guarantor and its Consolidated Subsidiaries as of March 31, 1997, and
the related statements of operations of the Guarantor and its
Consolidated Subsidiaries for the year ended December 31, 1996 and for
the three months ended March 31, 1997, and such pro forma consolidated
financial statements present fairly the information shown therein,
have been prepared in accordance with the Securities and Exchange
Commission's rules and guidelines with respect to pro forma
44
financial statements and have been properly compiled on the basis
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein.
30.5. Litigation. Except as set forth in Schedule 30.5 hereto and
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 Guarantor's or each
Lessee's knowledge, threatened against the Guarantor or such Lessee which
would, if adversely determined, have a Material Adverse Effect.
30.6. Liens. The Vehicles and other Collateral are free and clear of
all Liens other than (i) Permitted Liens and (ii) Liens in favor of the Lessor,
the Lender or the Trustee. The Trustee has obtained, and will continue to
obtain, for the benefit of the Secured Parties pursuant to the Indenture, a
first priority perfected Lien on all Vehicles leased hereunder. All Vehicle
Perfection and Documentation Requirements with respect to all Vehicles on or
after the date hereof have and will continue to be satisfied.
30.7. Employee Benefit Plans. (a) During the twelve consecutive month
period prior to the Closing Date: (i) no steps have been taken by the
Guarantor, any Lessee or any member of the Controlled Group, or to the
knowledge of the Guarantor, by any Person, to terminate any Pension Plan; and
(ii) no contribution failure has occurred with respect to any Pension Plan
maintained by the Guarantor, any Lessee or any member of the Controlled Group
sufficient to give rise to a Lien under Section 302(f)(1) of ERISA in
connection with such Pension Plan; and (b) no condition exists or event or
transaction has occurred with respect to any Pension Plan which could
reasonably be expected to result in the incurrence by the Guarantor or any
Lessee or any member of the Controlled Group of liabilities, fines or penalties
in an amount that could have a Material Adverse Effect.
30.8. Investment Company Act. Neither the Guarantor nor any Lessee is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended, and
neither the Guarantor nor any Lessee is subject to any other statute which
would impair or restrict its ability to perform its obligations under this
45
Agreement or the other Related Documents, and neither the entering into or
performance by the Guarantor or any Lessee of this Agreement violates any
provision of such Act.
30.9. Regulations G, T, U and X. Neither the Guarantor nor any Lessee
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System). None of the Guarantor, any Lessee, any Affiliates
of any of them or any Person acting on their behalf has taken or will take
action to cause the execution, delivery or performance of this Agreement or the
Loan Note, the making or existence of the Loans or the use of proceeds of the
Loans to violate Regulation G, T, U, or X of the Board of Governors of the
Federal Reserve System.
30.10. Business Locations; Trade Names; Principal Places of Business
Locations. Schedule 30.10 lists each of the locations where each of the Lessees
and the Guarantor maintains a chief executive office, principal place of
business, or any records; and Schedule 30.10 also lists the Lessees' and the
Guarantor's legal names, each name under or by which each of the Lessees and
the Guarantor conducts its business, each state in which each of the Lessees
and the Guarantor conducts business and each state in which each of the Lessees
and the Guarantor has its principal place of business.
30.11. Taxes. The Guarantor and each Lessee has filed all tax returns
which have been required to be filed by it (except where the requirement to
file such return is subject to a valid extension or such failure relates to
returns which, in the aggregate, show taxes due in an amount of not more than
$500,000), and has paid or provided adequate reserves for the payment of all
taxes shown due on such returns or required to be paid as a condition to such
extension, as well as all payroll taxes and federal and state withholding
taxes, and all assessments payable by it that have become due, other than those
that are payable without penalty or are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP. As of such
Closing Date, to the best of the Guarantor's or each Lessee's knowledge, there
is no unresolved claim by a taxing authority concerning the Guarantor's or such
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 proceed-
46
ings and with respect to which adequate reserves have been established and are
being maintained in accordance with GAAP.
30.12. Governmental Authorization. The Guarantor and each Lessee has
all licenses, franchises, permits and other governmental authorizations
necessary for all businesses presently carried on by it (including owning and
leasing the real and personal property owned and leased by it), except where
failure to obtain such licenses, franchises, permits and other governmental
authorizations would not have a Material Adverse Effect.
30.13. Compliance with Laws. Except as disclosed in Schedule 30.13
hereto, the Guarantor and each Lessee: (i) is not in violation of any law,
ordinance, rule, regulation or order of any Governmental Authority applicable
to it or its property, which violation would have a Material Adverse Effect,
and no such violation has been alleged, (ii) has filed in a timely manner all
reports, documents and other materials required to be filed by it with any
governmental bureau, agency or instrumentality (and the information contained
in each of such filings is true, correct and complete in all material
respects), except where failure to make such filings would not have a Material
Adverse Effect, and (iii) has retained all records and documents required to be
retained by it pursuant to any Requirement of Law, except where failure to
retain such records would not have a Material Adverse Effect.
30.14. Eligible Vehicles. Each Vehicle is or will be, as the case may
be, on the Vehicle Operating Lease Commencement Date with respect to such
Vehicle, an Eligible Vehicle.
30.15. 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 any Lessee to the Lessor is,
or will be, true, correct and complete.
30.16. Manufacturer Programs. No Manufacturer Event of Default has
occurred and is continuing with respect to any Eligible Manufacturer Program.
30.17. Absence of Default. The Guarantor and each Lessee is in
compliance with all of the provisions of its certificate or articles of
incorporation and by-laws and no event has occurred or failed to occur which
has not been remedied or waived, the occurrence or non-occurrence of which
constitutes, or with the passage of time or giving of notice or both would
constitute, (i)
47
an AESOP II Operating Lease Event of Default or a Potential AESOP II Operating
Lease Event of Default or (ii) a default or event of default by the Guarantor
or any Lessee under any material indenture, agreement or other instrument, or
any judgment, decree or final order to which the Guarantor or any Lessee is a
party or by which the Guarantor or any Lessee or any of their properties may be
bound or affected that could result in a Material Adverse Effect.
30.18. Title to Assets. The Guarantor and each Lessee has good, legal
and marketable title to, or a valid leasehold interest in, all of its assets,
except to the extent no Material Adverse Effect could result. None of such
properties or assets is subject to any Liens, except for Permitted
Encumbrances. Except for financing statements or other filings with respect to
or evidencing Permitted Encumbrances, no financing statement under the UCC of
any state, application for a Certificate of Title or certificate of ownership,
or other filing which names the Guarantor or any Lessee as debtor or which
covers or purports to cover any of the assets of the Guarantor or such Lessee
is on file in any state or other jurisdiction, and neither the Guarantor nor
any Lessee has signed any such financing statement, application or instrument
authorizing any secured party or creditor of such Person thereunder to file any
such financing statement, application or filing other than with respect to
Permitted Encumbrances and except, in each case, to the extent no Material
Adverse Effect could result.
30.19. Burdensome Provisions. Neither the Guarantor nor any Lessee is
a party to or bound by any Contractual Obligation that could have a Material
Adverse Effect.
30.20. No Adverse Change. Since March 31, 1997, (x) no material
adverse change in the business, assets, liabilities, financial condition,
results of operations or business prospects of the Guarantor or any Lessee has
occurred, and (y) no event has occurred or failed to occur, which has had or
may have, either alone or in conjunction with all other such events and
failures, a Material Adverse Effect.
30.21. No Adverse Fact. No fact or circumstance is known to the
Guarantor or any Lessee, as of such Closing Date, which, either alone or in
conjunction with all other such facts and circumstances, has had or might in
the future have (so far as the Guarantor or any Lessee can foresee) a Material
Adverse Effect which has not been set forth or referred to in the financial
statements referred to in Section 30.4 or 31.5 or in a writing
48
specifically captioned "Disclosure Statement" and delivered to the Lessor prior
to such Closing Date. If a fact or circumstance disclosed in such financial
statements or Disclosure Statement, or if an action, suit or proceeding
disclosed to the Lessor, should in the future have a Material Adverse Effect,
such Material Adverse Effect shall be a change or event subject to Section
30.20 notwithstanding such disclosure.
30.22. Accuracy of Information. All data, certificates, reports,
statements, opinions of counsel, documents and other information furnished to
the Lessor, the Lender or the Trustee by or on behalf of the Guarantor or any
Lessee pursuant to any provision of any Related Document, or in connection with
or pursuant to any amendment or modification of, or waiver under, any Related
Document, shall, at the time the same are so furnished, (i) be complete and
correct in all material respects to the extent necessary to give the Lessor,
the Lender or the Trustee, as the case may be, true and accurate knowledge of
the subject matter thereof, (ii) not contain any untrue statement of a material
fact and (iii) not omit to state a material fact necessary in order to make the
statements contained therein (in light of the circumstances in which they were
made) not misleading, and the furnishing of the same to the Lessor, the Lender
or the Trustee, as the case may be, shall constitute a representation and
warranty by the Guarantor and each Lessee made on the date the same are
furnished to the Lessor, the Lender or the Trustee, as the case may be, to the
effect specified in clauses (i), (ii) and (iii).
30.23. Solvency. Both before and after giving effect to the
transactions contemplated by this Agreement and the other Related Documents,
each of the Guarantor and each Lessee is solvent within the meaning of the
Bankruptcy Code and each of the Guarantor and each Lessee is not the subject of
any voluntary or involuntary case or proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy or insolvency law and no Event of Bankruptcy has occurred with
respect to the Guarantor or any Lessee.
31. CERTAIN AFFIRMATIVE COVENANTS. Until the expiration or termination
of this Agreement, and thereafter until the obligations of the Lessees and the
Guarantor under this Agreement and the Related Documents are satisfied in full,
each Lessee covenants and agrees as to itself, and the Guarantor covenants and
agrees as to itself and as to each Lessee that, unless at any time the Lessor,
the Lender and the Trustee shall otherwise ex-
49
pressly consent in writing, it will (and, in the case of the Guarantor, will
cause each Lessee to):
31.1. Corporate Existence; Foreign Qualification. Do and cause to be
done at all times all things necessary to (i) maintain and preserve the
corporate existence of the Guarantor and each Lessee (it being understood that
subject to Section 32.1, each Lessee shall remain a direct or indirect
Wholly-Owned Subsidiary of the Guarantor); (ii) be, and ensure that each Lessee
is, duly qualified to do business and in good standing as a foreign corporation
in each jurisdiction where the nature of its business makes such qualification
necessary and the failure to so qualify would have a Material Adverse Effect;
and (iii) comply with all Contractual Obligations and Requirements of Law
binding upon it and its Subsidiaries, except to the extent that the failure to
comply therewith would not, in the aggregate, have a Material Adverse Effect.
31.2. Books, Records and Inspections. (i) Maintain complete and
accurate books and records with respect to the Vehicles leased by it under this
Agreement and (ii) permit any Person designated by the Lessor, the Lender or
the Trustee in writing to visit and inspect any of the properties, corporate
books and financial records of the Guarantor and its Subsidiaries and to
discuss its affairs, finances and accounts with officers of the Guarantor and
its Subsidiaries, agents of the Guarantor and with the Guarantor's independent
public accountants, all at such reasonable times and as often as the Lessor or
the Trustee may reasonably request.
31.3. Insurance. Obtain and maintain with respect to all Vehicles that
are subject to this Agreement (a) vehicle liability insurance to the full
extent required by law and in any event not less than $500,000 per Person and
$1,000,000 per occurrence, (b) property damage insurance with a limit of
$1,000,000 per occurrence, and (c) excess coverage public liability insurance
with a limit of not less than $50,000,000 or the limit maintained from time to
time by the relevant Lessee at any time hereafter, whichever is greater, with
respect to all passenger cars and vans comprising such Lessee's rental fleet.
The Lessor acknowledges and agrees that each Lessee may, to the extent
permitted by applicable law, self-insure for the first $1,000,000 per
occurrence, or a greater amount up to a maximum of $3,000,000, with the consent
of each Enhancement Provider, per occurrence, of vehicle liability and property
damage which is otherwise required to be insured hereunder. All such policies
shall be from financially sound and reputable insurers, shall name the Lender,
the Lessor and the
50
Trustee as additional insured parties and, in the case of catastrophic physical
damage insurance on such Vehicles, shall name the Trustee as loss payee as its
interest may appear and will provide that the Lender, the Lessor and the
Trustee shall receive at least 10 days' prior written notice of cancellation of
such policies. Each Lessee will notify promptly the Lender, the Lessor and the
Trustee of any curtailment or cancellation of such Lessee's right to
self-insure in any jurisdiction.
31.4. Manufacturer Programs. Turn in the Vehicles leased by such
Lessee to the relevant Manufacturer within the Repurchase Period therefor
(unless such Lessee sells such Program Vehicle prior to the end of the
Repurchase Period therefor and receives sales proceeds thereof in cash in an
amount equal to or greater than the repurchase price under such Manufacturer
Program); and comply with all of its obligations under each Manufacturer
Program.
31.5. Reporting Requirements. Furnish, or cause to be furnished to the
Lessor, the Lender and the Trustee:
(i) Audit Report. As soon as available and in any event
within 120 days after the end of each fiscal year of the Guarantor,
(a) consolidated financial statements consisting of a statement of
financial position of the Guarantor and its Consolidated Subsidiaries
as of the end of such fiscal year and a statement of operations,
stockholders' equity and cash flows of the Guarantor and its
Consolidated Subsidiaries for such fiscal year, setting forth in
comparative form the corresponding figures for the preceding fiscal
year, certified by and containing an opinion, unqualified as to scope,
of independent certified public accountants of recognized standing
selected by the Guarantor and acceptable to the Lessor, the Lender and
the Trustee, accompanied by (b) a letter from such accountants
addressed to the Lessor , the Lender and the Trustee stating that, in
the course of their annual audit of the books and records of the
Guarantor, no Potential AESOP II Operating Lease Event of Default or
AESOP II Operating Lease Event of Default has come to their attention
which was continuing at the close of such fiscal year or on the date
of their letter, or, if such an event has come to the attention of
such accountants and was continuing at the close of such fiscal year
or on the date of their letter, the nature of such event, it being
understood that such accountants shall have no liability to the
Lessor, the Lender or the Trustee by reason of the failure of such
accountants to obtain knowledge of the occurrence or
51
continuance of such an AESOP II Operating Lease Event of Default or
Potential AESOP II Operating Lease Event of Default;
(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 Guarantor, (a) financial statements
consisting of a consolidated statement of financial position of the
Guarantor and its Consolidated Subsidiaries as of the end of such
quarter and a statement of operations, stockholders' equity and cash
flows of the Guarantor and its Consolidated Subsidiaries for each such
quarter, setting forth in comparative form the corresponding figures
for the corresponding periods of the preceding fiscal year, all in
reasonable detail and certified (subject to year-end audit
adjustments) by a senior financial officer of the Guarantor as having
been prepared in accordance with GAAP consistently applied,
accompanied by (b) a letter from such officer addressed to the Lessor,
the Lender and the Trustee stating that no Potential AESOP II
Operating Lease Event of Default or AESOP II Operating Lease Event of
Default has come to his attention which was continuing at the end of
such quarter or on the date of his letter, or, if such an event has
come to his attention and was continuing at the end of such quarter or
on the date of his letter, indicating the nature of such event and the
action which the Guarantor proposes to take with respect thereto;
(iii) Amortization Events and AESOP II Operating Lease Events
of Default. As soon as possible but in any event within two Business
Days after the occurrence of any Amortization Event, Potential
Amortization Event, AESOP II Operating Lease Event of Default or
Potential AESOP II Operating Lease Event of Default, a written
statement of an Authorized Officer describing such event and the
action that the Guarantor or such Lessee, as the case may be, proposes
to take with respect thereto;
(iv) Manufacturers. Promptly after obtaining actual knowledge
thereof, notice of any Manufacturer Event of Default or termination or
replacement of a Manufacturer Program;
(v) Interim Financial Statements. Promptly following the
Guarantor's receipt thereof, copies of all other financial reports
submitted to the Guarantor by independent public accountants relating
to any annual or interim audit
52
of the books of the Guarantor, or opinion as to the proper
book value of the assets of the Guarantor;
(vi) Reports. Promptly, from time to time, such information
with respect to the Vehicles leased hereunder and payments made and
owing hereunder as the Lessor may require to satisfy its reporting
obligations to the Lender pursuant to Section 9.5 of the AESOP II Loan
Agreement; and
(vii) Other. Promptly, from time to time, such other
information, documents, or reports respecting the Vehicles leased
hereunder or the condition or operations, financial or otherwise, of
the Guarantor or such Lessee as the Lessor, the Lender or the Trustee
may from time to time reasonably request in order to protect the
interests of the Lessor, the Lender or the Trustee under or as
contemplated by this Agreement or any other Related Document.
31.6. Payment of Taxes; Removal of Liens. Pay when due all taxes,
assessments, fees and governmental charges of any kind whatsoever that may be
at any time lawfully assessed or levied against or with respect to such Lessee,
the Guarantor or their respective property and assets or any interest thereon.
Notwithstanding the previous sentence, but subject in any case to the other
requirements hereof and of the Related Documents, neither such Lessee nor the
Guarantor shall be required to pay any tax, charge, assessment or imposition
nor to comply with any law, ordinance, rule, order, regulation or requirement
so long as such Lessee or the Guarantor shall contest, in good faith, the
amount or validity thereof, in an appropriate manner or by appropriate
proceedings. Each such contest shall be promptly prosecuted to final conclusion
(subject to the right of the Guarantor or such Lessee to settle any such
contest).
31.7. Business. Such Lessee will engage only in businesses in
substantially the same or related fields as the businesses conducted on the
date hereof and such other lines of business, which, in the aggregate, do not
constitute a material part of the operations of such Lessee.
31.8. Maintenance of Separate Existence. Each of the Guarantor and
such Lessee acknowledges its receipt of a copy of that certain opinion letter
issued by Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP dated the Initial Closing
Date and addressing the issue of substantive consolidation as it may relate to
the Guarantor, each Lessee, the Lessor, AESOP Leasing, Original AESOP, AFC-II
and AFC. The Guarantor and each Lessee hereby
53
agree to maintain in place all policies and procedures, and take and continue
to take all action, described in the factual assumptions set forth in such
opinion letter and relating to such Person.
31.9. Trustee as Lienholder. Concurrently with each leasing of a
Vehicle under this Agreement, the Administrator shall indicate on its computer
records that the Trustee as assignee of the Lender is the holder of a Lien on
such Vehicle pursuant to the terms of the Indenture.
31.10. Maintenance of the Vehicles. Maintain and cause to be
maintained in good repair, working order, and condition all of the Vehicles
leased by such Lessee in accordance with its ordinary business practices with
respect to all other vehicles owned by it, except to the extent that any such
failure to comply with such requirements does not, in the aggregate, materially
adversely affect the interests of the Lessor under this Agreement, the
interests of the Lender under the AESOP II Loan Agreement or the Secured
Parties under the Indenture or the likelihood of repayment of the Loans. From
time to time the Guarantor and such Lessee will make or cause to be made all
appropriate repairs, renewals, and replacements with respect to the Vehicles.
The Guarantor and such Lessee shall maintain good, legal and marketable title
to, or a valid leasehold interest in, all of its assets, free and clear of all
Liens except for Permitted Liens, and except to the extent sold or otherwise
disposed of in accordance with this Agreement or any of the other Related
Documents, and except to the extent no Material Adverse Effect could result.
31.11. Enhancement. If the Enhancement with respect to any Series of
Notes is provided by a letter of credit and (i) the short-term debt or deposit
rating of the Enhancement Provider of such letter of credit shall be downgraded
below the then-current rating of such Series of Notes by the Rating Agencies
with respect to such Series of Notes or (ii) such Enhancement Provider shall
notify the Lessees that its compliance with any of its obligations under such
letter of credit would be unlawful, use its best efforts to obtain a successor
institution to act as Enhancement Provider or, in the alternative, to otherwise
credit enhance the payments to be made under this Agreement by the Lessees,
subject to the satisfaction of the Rating Agency Confirmation Condition and any
other requirements set forth in the Related Documents.
31.12. Manufacturer Payments. Cause each Manufacturer and auction
dealer to make all payments made by it under the Manufac-
54
turer Programs with respect to Vehicles leased hereunder directly to the
Collection Account. Any such payments from Manufacturers or related auction
dealers received directly by the Guarantor or any Lessee, will be, within three
Business Days of receipt, deposited into the Collection Account.
31.13. Accounting Methods; Financial Records. Maintain, and cause each
of its material Subsidiaries to maintain, a system of accounting and keep, and
cause each of its material Subsidiaries to keep, such records and books of
account (which shall be true and complete) as may be required or necessary to
permit the preparation of financial statements in accordance with GAAP.
31.14. Disclosure to Auditors. Disclose, and cause each of its
material Subsidiaries to disclose, to its independent certified public
accountants in a timely manner all loss contingencies of a type requiring
disclosure to auditors under accounting standards promulgated by the Financial
Accounting Standards Board.
32. CERTAIN NEGATIVE COVENANTS. Until the expiration or termination of
this Agreement and thereafter until the obligations of each Lessee and the
Guarantor under this Agreement and the Related Documents are satisfied in full,
each Lessee covenants and agrees as to itself, and the Guarantor covenants and
agrees as to itself and as to each Lessee that, unless at any time the Lessor
and the Trustee shall otherwise expressly consent in writing, it will not (and,
in the case of the Guarantor, will not permit each Lessee to):
32.1. Mergers, Consolidations. Merge or consolidate with any Person,
except that, if after giving effect thereto, no Potential AESOP II Operating
Lease Event of Default or AESOP II Operating Lease Event of Default would
exist, this Section 32.1 shall not apply to (i) any merger or consolidation,
provided that the Guarantor or such Lessee, as applicable, is the surviving
corporation and, if such Lessee is the surviving corporation, it is a direct or
indirect Wholly-Owned Subsidiary of the Guarantor after such merger or
consolidation and (ii) any merger or consolidation of such Lessee with or into
another Subsidiary of the Guarantor, provided that the surviving entity
executes an agreement of assumption to perform every obligation of such Lessee
under this Agreement and that such surviving entity is a direct or indirect
Wholly-Owned Subsidiary of the Guarantor.
32.2. Other Agreements. Enter into any agreement contain-
ing any provision which would be violated or breached by the
55
performance of its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection herewith.
32.3. Liens. Create or permit to exist any Lien with respect to any
Vehicle leased hereunder now or hereafter existing or acquired, except for
Permitted Liens.
32.4. Use of Vehicles. Use or allow the Vehicles to be used in any
manner that would (i) make such Vehicles ineligible for repurchase under an
Eligible Manufacturer Program, (ii) for any illegal purposes or (iii) subject
the Vehicles to confiscation.
32.5. Termination of Agreement. Allow this Agreement to terminate
prior to the termination of each other Lease.
33. ADMINISTRATOR ACTING AS AGENT OF THE LESSOR. The parties to this
Agreement acknowledge and agree that ARAC shall act as Administrator and, in
such capacity, as the agent for the Lessor, for purposes of performing certain
duties of the Lessor under this Agreement and the Related Documents. As
compensation for the Administrator's performance of such duties, the Lessor
shall pay to the Administrator on each Payment Date (i) the portion of the
Monthly Administration Fee payable by the Lessor pursuant to the Administration
Agreement and (ii) the reasonable costs and expenses of the Administrator
incurred by it as a result of arranging for the sale of Vehicles returned to
the Lessor as a result of a Vehicle Return Default and sold to third parties,
provided, however, that such costs and expenses shall only be payable to the
Administrator to the extent of any excess of the sale price received by the
Lessor for any such Vehicle over the Termination Value thereof.
34. NO PETITION. Each of the Guarantor, each Lessee and the
Administrator hereby covenants and agrees that, prior to the date which is one
year and one day after the payment in full of all of the Notes and the
Commercial Paper Notes, it will not institute against, or join any other Person
in instituting against, the Lessor, Original AESOP, AESOP Leasing, Quartx,
PVHC, AFC or AFC-II any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States. In the event that the
Guarantor, any Lessee or the Administrator takes action in violation of this
Section 34, the Lessor agrees, for the benefit of the Secured Parties, that it
shall file an answer with the bankruptcy court or otherwise
56
properly contest the filing of such a petition by the Guarantor, such Lessee or
the Administrator against the Lessor, Original AESOP, AESOP Leasing, Quartx,
PVHC, AFC or AFC-II or the commencement of such action and raise the defense
that the Guarantor, such Lessee or the Administrator 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 34 shall survive the termination of this Agreement.
35. SUBMISSION TO JURISDICTION. The Lessor and the Trustee may enforce
any claim arising out of this Agreement in any state or federal court having
subject matter jurisdiction, including, without limitation, any state or
federal court located in the State of New York. For the purpose of any action
or proceeding instituted with respect to any such claim, the Guarantor and each
Lessee hereby irrevocably submits to the jurisdiction of such courts. The
Guarantor and each Lessee further irrevocably consents to the service of
process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to the Guarantor or such Lessee, as the case may be, and
agrees that such service, to the fullest extent permitted by law, (i) shall be
deemed in every respect effective service of process upon it in any such suit,
action or proceeding and (ii) shall be taken and held to be valid personal
service upon and personal delivery to it. Nothing herein contained shall affect
the right of the Trustee, the Lender and the Lessor to serve process in any
other manner permitted by law or preclude the Lessor, the Lender or the Trustee
from bringing an action or proceeding in respect hereof in any other country,
state or place having jurisdiction over such action. The Guarantor and each
Lessee hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may have or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court located in the State
of New York and any claim that any such suit, action or proceeding brought in
such a court has been brought in an inconvenient forum.
36. 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 (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating
57
the remainder of such provision or the remaining provisions of this Agreement.
All obligations of the Guarantor and each Lessee and all rights of the Lessor,
the Lender 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.
37. 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.
38. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing including facsimile transmission or similar
writing) and shall be given to such party, addressed to it, at its address or
telephone number set forth on the signature pages below, or at such other
address or telephone number as such party may hereafter specify for the purpose
by notice to the other party. In each case, a copy of all notices, requests and
other communications that are sent by any party hereunder shall be sent to the
Trustee and the Lender and a copy of all notices, requests and other
communications that are sent by any Lessee or the Guarantor to each other that
pertain to this Agreement shall be sent to the Lessor, the Lender and the
Trustee. Copies of notices, requests and other communications delivered to the
Trustee, the Lender and/or the Lessor pursuant to the foregoing sentence shall
be sent to the following addresses:
TRUSTEE: Xxxxxx Trust and Savings Bank
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
58
LENDER: AESOP Funding II L.L.C.
------
c/o Lord Securities Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
LESSOR: AESOP Leasing Corp. II
------
c/o Lord Securities Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Each such notice, request or communication shall be effective when received at
the address specified below. Copies of all notices must be sent by first class
mail promptly after transmission by facsimile.
39. LIABILITY. Each Lessee shall be held jointly and severally
liable for all of the obligations of each other Lessee and the Guarantor
hereunder. The Guarantor shall be held jointly and severably liable for all the
obligations of each Lessee hereunder.
40. TITLE TO MANUFACTURER PROGRAMS IN LESSOR. 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, (ii) in accordance with the Assignment Agreements, all of the
Lessor's right, title and interest in and to such Manufacturer Programs have
been assigned to the Trustee and (iii) no Lessee has any right, title or
interest in any Manufacturer Program. To confirm the foregoing, each Lessee, by
its execution hereof, hereby assigns and transfers to the Lessor any rights
that such Lessee may have in respect of any Manufacturer Programs.
41. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
42. 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
59
all of which counterparts, taken together, shall constitute one and the same
Agreement.
43. EFFECTIVENESS. This Agreement shall become effective concurrently
with the issuance of the Loan Note under the AESOP II Loan Agreement.
44. NO RECOURSE. The obligations of AESOP Leasing II under this
Agreement are solely the corporate obligations of AESOP Leasing II. No recourse
shall be had for the payment of any obligation or claim arising out of or based
upon this Agreement against any shareholder, employee, officer, director or
incorporator of AESOP Leasing II.
60
IN WITNESS WHEREOF, the parties have executed this Agreement
or caused it to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
LESSOR:
AESOP LEASING CORP. II
By: /s/ Xxxxx X. Xxxxxxxx
Address: c/o Lord Securities
Corporation
Two Wall Street
19th Floor
New York, New York 10005
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telefax: (000) 000-0000
LESSEE AND ADMINISTRATOR:
AVIS RENT A CAR SYSTEM, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------
Address: 000 Xxx Xxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Attention: Treasurer
cc: General Counsel
Telephone: (000) 000-0000
Telefax: (000) 000-0000
GUARANTOR:
AVIS RENT A CAR, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Address: 000 Xxx Xxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Attention: Treasurer
cc: General Counsel
Telephone: (000) 000-0000
Telefax: (000) 000-0000
COUNTERPART NO. OF TEN (10) SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS.
TO THE EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE
UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED
THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1.
SCHEDULE 30.5
Litigation
[NONE]
SCHEDULE 30.10
Business Locations
=============================================================================================================================
PARTY PRINCIPAL PLACE OF ADDITIONAL RECORDS STATES IN WHICH CON-
BUSINESS LOCATION DUCTS BUSINESS
-----------------------------------------------------------------------------------------------------------------------------
Avis Rent A Car 000 Xxx Xxxxxxx Xxxx 300 Centre Pointe Dr. AZ, AR, CA, CO, CT,
System, Inc. Garden City, NY Virginia Beach, VA DE, DC, FL, GA, HI,
d/b/a/ Avis Rent 11530 23462 ID, IL, IN, KS, KY, LA,
A Car and Avis ME, MD, MA, MI, MN,
MS, MO, MT, NE, NV,
NJ, NM, NY, NC, OH,
OK, OR, PA, RI, SC,
TN, TX, UT, VT, VA,
WA, WV, WI and WY
-----------------------------------------------------------------------------------------------------------------------------
Avis Rent A 000 Xxx Xxxxxxx Xxxx XX
Car, Inc. Xxxxxx Xxxx, XX
00000
=============================================================================================================================
SCHEDULE 30.13
Compliance with Law
[NONE]
ATTACHMENT A
Information Relating to Initial Leased Vehicles
I. Initial AESOP Vehicles (as of the Initial Closing Date)
a. [For each Vehicle] Vehicle Identification Number
b. [For each Vehicle] Net Book Value
A-1
ATTACHMENT B
Vehicle Acquisition Schedule and Related Information
1. Principal amount of Loan financing the Vehicle
2. Date of Loan financing the Vehicle
3. Vehicle Operating Lease Commencement Date
4. Vehicle Identification Number (VIN)
5. Summary of Vehicles being financed (including, for Vehicles
subject to the GM Repurchase Program, the Designated Period
for such Vehicles)
6. Program or Non-Program Vehicle
7. Capitalized Cost (if applicable)
8. Net Book Value (if applicable)
B-1
ATTACHMENT C
Form of Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that AESOP LEASING CORP. II
does hereby make, constitute and appoint Avis Rent A Car System, Inc. ("ARAC")
its true and lawful Attorney-in-Fact for it and in its name, stead and behalf,
(i) to execute any and all documents pertaining to the titling of motor
vehicles in the name of AESOP LEASING CORP. II or AESOP LEASING CORP., (ii) the
noting of the lien of Xxxxxx Trust and Savings Bank, as trustee (in such
capacity, the "Trustee"), as the first lienholder on certificates of title,
(iii) the licensing and registration of motor vehicles, (iv) designating c/o
ARAC as the mailing address of the Trustee for all documentation relating to
the title and registration of such motor vehicles, (v) applying for duplicate
certificates of title indicating the lien of the Trustee where original
certificates of title have been lost or destroyed and (vi) upon the sale of any
such motor vehicle pursuant to the Master Motor Vehicle Operating Lease
Agreement, dated as of July 30, 1997, among AESOP Leasing Corp. II, ARAC, any
other Eligible Rental Car Company that becomes a party thereto pursuant to the
terms thereof and Avis Rent A Car, Inc., in accordance with the terms and
conditions thereof, releasing the lien of the Trustee on such motor vehicle by
executing any documents required in connection therewith. This power is limited
to the foregoing and specifically does not authorize the creation of any liens
or encumbrances on any of said motor vehicles.
The powers and authority granted hereunder shall, unless
sooner terminated, revoked or extended, cease eight years from the date of
execution as set forth below.
C-1
IN WITNESS WHEREOF, AESOP LEASING CORP. II has caused
this instrument to be executed on its behalf by its duly autho-
rized officer this ___ day of ______, 19__.
AESOP LEASING CORP. II
By:
---------------------------------
State of ________ )
County of _______ )
Subscribed and sworn before me, a notary public, in and for said
county and state, this ___ day of _____, 19__.
----------------------------------------
Notary Public
My Commission Expires: _______
C-2
ATTACHMENT D
Form of Joinder in Lease
THIS JOINDER IN LEASE AGREEMENT (this "Joinder") is executed
as of ___________ __, 19__, by _______________, a _______________ ("Joining
Party"), and delivered to AESOP Leasing Corp. II, a Delaware corporation
("AESOP Leasing II"), as lessor pursuant to the Master Motor Vehicle Operating
Lease Agreement, dated as of July 30, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"), among AESOP Leasing II,
Avis Rent A Car System, Inc., a Delaware corporation ("ARAC"), and other
Eligible Rental Car Companies that become party to the Lease pursuant to the
provisions of Section 24 thereof (individually, a "Lessee" and, collectively,
the "Lessees"), and Avis Rent A Car, Inc. ("ARC"), as guarantor. Capitalized
terms used herein but not defined herein shall have the meanings provided for
in the Lease.
R E C I T A L S:
WHEREAS, the Eligible Rental Car Company is a direct or
indirect Subsidiary of ARC; and
WHEREAS, the Eligible Rental Car Company desires to become a
"Lessee" under and pursuant to the Lease.
NOW, THEREFORE, the Eligible Rental Car Company agrees as
follows:
A G R E E M E N T:
1. The Joining Party hereby represents and warrants to and in
favor of AESOP Leasing II and the Trustee that (i) the Eligible Rental Car
Company is a direct or indirect wholly-owned Subsidiary of ARC, (ii) all of the
conditions required to be satisfied pursuant to Section 24 of the lease in
respect to the Eligible Rental Car Company becoming a Lessee thereunder have
been satisfied, and (iii) all of the representations and warranties contained
in Section 30 of the Lease with respect to the Lessees are true and correct as
applied to the Eligible Rental Car Company as of the date hereof.
2. The Eligible Rental Car Company hereby agrees to assume
all of the obligations of a "Lessee" under the Lease and agrees to be bound by
all of the terms, covenants and conditions therein.
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3. By its execution and delivery of this Joinder, the
Eligible Rental Car Company hereby becomes a Lessee for all purposes under the
Lease. By its execution and delivery of this Joinder, AESOP Leasing II
acknowledges that the Joining Party is a Lessee for all purposes under the
Lease.
IN WITNESS WHEREOF, the Eligible Rental Car Company has
caused this Joinder to be duly executed as of the day and year first above
written.
[Name of Joining Party]
By: __________________________
Name:
Title:
Accepted and Acknowledged by:
AESOP LEASING CORP. II
By: ___________________________
Name:
Title:
Acceptance and Acknowledegment by:
ARC as guarantor:
By: ___________________________
Name:
Title:
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